Adaro Energy has secured US$380mn amortizing loan facility

Adaro Energy (ADRO IJ) has secured US$380mn amortizing loan facility which will due in May 2020 for its subsidiary PT Adaro Indonesia with undisclosed rate. The group received a total commitment up to US$2.8bn, 7.5x oversubscribed, from a group of 12 international banks. The new facility will be used to refinance the existing US$500mn revolving credit facility obtained in 2009 to extend the debt maturity profile and strengthen the balance sheet.

Adaro Group has one of the strongest credit accesses to banks in the industry supported by strong founder track record. With 7.5x oversubscribe suggest that investor confidence remain high on the company amid bleak coal outlook. Adaro has been aggressively acquiring low rank coal assets in Sumatra and Kalimantan to support its long-term business strategy especially integrated into power business. However, with coal prices outlook remain challenging below US$90/t, it will take longer term for ADRO to monetize those coal assets.

ADRO share price has been hammered badly following negative sentiment from market speculation about China’s National Energy Administration (NEA) plan to ban low rank coal import below 4,500 kcal NAR. Currently we have Sell rating on the counter, but continued selling pressure should give attractive entry point for ADRO as the share now is trading below our TP at 12.7x – 13.3x P/E13F-13F.

for Indonesia Market Summaries 4 June 2013