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Fitch rates Medco Energi notes B+
Fitch Ratings said it assigned an expected rating of B+ and recovery rating of RR4 to PT Medco Energi Internasional Tbk.'s proposed dollar-denominated notes.
The notes will be issued by Medco's wholly owned subsidiary, Medco Oak Tree Pte. Ltd.
The notes would be guaranteed by Medco and some of its key subsidiaries only after Medco completes the acquisition of Ophir Energy plc, Fitch explained.
Ophir's shareholders had approved Medco's acquisition plan in March 2019 and Medco is awaiting certain approvals to complete the acquisition, the agency said.
The proceeds raised via the proposed notes would be held in escrow until certain conditions are met and then Medco would redeem the issued notes in full with a special redemption fee of 1% and accrued interest if the approvals pertaining to the acquisition of Ophir are not obtained prior to the acquisition deadline of July 4, Fitch said.
Medco would prefund the escrow account to ensure a sufficient amount is available to redeem the notes in full, including redemption fees and interest accrued until the acquisition deadline, the agency said.
The expected rating on the notes is at the same level as Medco's issuer default rating as they would constitute direct, unsubordinated and unsecured obligations of the company upon the completion of the Ophir acquisition transaction, Fitch said.
The ratings reflect the company's improving financial profile, supported by its efforts to sell its non-core assets to reduce leverage, the agency said.
The ratings also consider that the Ophir acquisition will be value accretive and is likely to further strengthen its financial and operating profile, Fitch said.
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