Moody’s Investors Service has revised ABM Investama (ABMM)’s ratings outlook to negative from stable. At the same time, Moody’s has affirmed the company’s Ba3 corporate family rating and the Ba3 senior unsecured rating on its US$350 million notes due 2022.
The change in ABM’s ratings outlook to negative reflects mounting operational difficulties in its core businesses which has been evidenced by materially weaker-than-expected earnings growth over recent quarters.
To counter the lower production at PT Tunas Inti Abadi (TIA), which is nearing the end of its reserve life, ABM plans to ramp up volumes at its 70%-owned mining subsidiary, PT Mifa Bersaudara (MIFA), to 10 million tons a year from the five million tons expected in 2018.
In addition, Moody’s notes that based on current production levels, TIA reserves will be depleted by 2021, prior to the maturity of ABM’s $350 million bond due August 2022.
ABMM is an integrated energy company with investments in coal mining, mining services, engineering and logistics, and power generation. The Hamami family controls 78% of ABM through PT Tiara Margo Trakindo (23%) and Valle Verde PTE LTD (55%). The remaining shares are held by the public.