• Twitter
  • Facebook
  • Instagram
  • Subscribe
  • Free Newsletter
  • My Account
Tyrepress
  • 0Shopping Cart
  • NewsNews
    • Latest News
    • Company News
    • UK News
    • Product News
    • International News
    • Retreading
    • Career Tracks
    • Motorsport
    • Video
    • Tyrepress Videos
  • Data
    • Leading Tyre Manufacturers
    • Leading Retailers (UK)
    • Social Media Ranking
    • Online Branding
    • Brand Finance rankings
    • Blue Light Fleet Analysis
    • Astutus Research analysis
    • Tire Market Forecasts
  • Features
    • Goodyear to buy Cooper – special supplement
    • TPMS and Sensor Technology 2021
    • Tyre Industry Conference 2020
    • Online Tyre Business 2020
    • Kick-starting your business webinar May 2020
  • Business Directory
    • Browse Entries
    • List Your Company on the Business Directory
  • Jobs
    • Situations vacant
    • Career Tracks
  • Classifieds
  • Magazine
    • Latest Issue
    • Read Tyres & Accessories Magazine online
    • Tyres & Accessories Magazine Archive
  • Shop
    • Subscription Shop
    • Report Shop
    • Directory Shop
  • About
    • Company Profile
    • Media Information
    • Frequently Asked Questions (FAQs)
    • Legal
    • Contact Us
  • Tyre Tests
  • Search
  • Menu
You are here: Home1 / News2 / Career Tracks3 / Gajah Tunggal accused of covenant breach, Moody’s considering rating d...

Gajah Tunggal accused of covenant breach, Moody’s considering rating downgrade

Date: 12th October 2011 Author: Tyrepress Editors Comments: 0

Moody's Investors Service has placed PT Gajah Tunggal Tbk's B3 corporate family and senior secured ratings on review for possible downgrade. According to a report published in Indonesia Today, this review action follows “the payment of a dividend to shareholders seemingly in contravention of the covenants of its restructured bonds launched in June 2009, and the resulting alleged claim of covenant breach by an anonymous bondholder.”

Moody’s reports that more than 25 per cent of bondholders would need to agree to a declaration of covenant breach in order to enforce accelerated repayment of the bond, which matures in 2014. “The situation is somewhat unusual in that the dividend was paid last year without the potential covenant breach being disputed by bondholders, yet the dividend declared and paid this year – about US$5 million – is less than last year’s payment” said Alan Greene, a Moody’s vice president and senior credit officer.

“There seems to be some uncertainty as to the role and requirements of Indonesian Company Law with respect to the dividend payments. Moreover, if the cash dividend was approved by a meeting of shareholders, in the knowledge that the action could potentially accelerate the bond repayment, then this might indicate lapses in the area of corporate governance” Greene, who is also Moody’s lead analyst for Gajah Tunggal explained.

According to Indonesia Today, Gajah Tunggal’s financial metrics have broadly met expectations since Moody’s last rating action. As a result, the outcome of the review is expected to be “highly dependent on the crystallization of this potential event of default…An acceleration of the bond repayment would likely lead to a multiple notch downgrade.” However this is far from clear in what the credit ratings analysts themselves described as an unusual case.
 
Gajah Tunggal is currently said to produce 35 million tyres across the motorcycle, passenger car and commercial vehicle sectors. Exports accounted for 36 per cent of sales in 2010 and replacement market turnover accounted for almost 87 per cent of total tyre sales in last year’s full-year results. Giti Tire, the Chinese tyre manufacturer that is itself a wholly owned foreign entity operating within the People’ Republic, is a 48.89 per cent shareholder in the company through its subsidiary, Denham Pte Ltd. Compagnie Financiere Michelin holds a 10 per cent interest.

During the week before the Moody’s report hit the press, credit agencies Fitch and Standard & Poor’s altered their rating for China-based GITI Tire Pte. Ltd. However Standard & Poor’s Ratings Services said its rating for PT Gajah Tunggal Tbk is “unaffected by the downgrade” of GITI Tire Pte. Ltd. “We do not expect liquidity pressure at GITI to affect our assessment of Gajah Tunggal’s liquidity,” the credit analysts said at the time.

Related news:

  • Credit agencies lower GITI Tire rating, Gajah Tunggal not affected

Related news:

  1. GITI arranging US$225 million loan
  2. Giti Tire Corporation 2010 earnings down 64 per cent
  3. Giti Tire USA clarifies financial figures
  4. Credit agencies lower GITI Tire rating, Gajah Tunggal not affected
Comments

Leave a Reply Cancel reply

Connect with:
Facebook Google Twitter

Your email address will not be published. Required fields are marked *

Share this entry
  • Share on Facebook
  • Share on Twitter
  • Share on WhatsApp
  • Share on LinkedIn
  • Share on Reddit
  • Per E-Mail teilen

Advert Location 348

Related Tags

about us, Career Tracks, China, Gajah Tunggal, Giti Tire, Indonesia, Michelin

Advert Location 28

Top five articles this week

Advert Location 29

© 2020 - Tyrepress
  • Twitter
  • Facebook
  • Instagram
  • WhatTyre
  • Reifenpresse
  • PneusNews
Starco setting up solid tyre plant in Sri Lanka Raw Tyres wins £8,995 alignment prize
Scroll to top