Corporate Debt Restructuring Masterclass

18 July 2022 (Mon), 5pm Singapore/HK time

Moody’s has placed PB’s regional peer Sri Rejeki Isman (Sritex) under review for downgrade. The action comes as a firm agreement with the lenders on a proposed request for a two year extension on its $350mn syndicated loan maturing January 2022 is not reached even after the deadline of March 1 has passed. The company has poor liquidity as it held cash and equivalents of $159mn as of September 30, 2020 with an expected FCF of $50mn over the next 15 months, which is inadequate to fund its upcoming maturities of $174mn outstanding in short-term working capital. The ratings of the clothing company could be confirmed if Sritex manages its upcoming maturities and liquidity issues and could be downgraded by one notch in the absence of a concrete financing plan.  The company was downgraded to B1 from Ba3 by Moody’s in December 2020 due to its weakened liquidity position and debt structure amid growing reliance on short-term funding. Fitch had revised its outlook to negative while confirming the BB- rating in Dec last year.
Sritex’s 6.875% 2024s and 7.25% 2025s were up 0.97 and 1.17 to trade at 82.75 and 83 cents on the dollar on the secondary markets.
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