Express Transindo Utama Tbk (TAXI) is facing an increased refinancing risk due to weak cash flow and corporate liquidity and the uncertainty due to the increasingly tight competition in transportation business and the low utilization of the company’s fleet.
Pemeringkat Efek Indonesia (Pefindo) lowered TAXI and Bond I / 2014 issued by the company from idBBB to idBB+. “This reflects our expectations for the financial performance of 2017 to 2018 which is below the initial projection,” said Yogie Surya Perdana, Analyst of Pefindo.
The Supreme Court’s decision to revoke 14 articles in Regulation of the Minister of Communications No. 26 of 2017 managing online-based taxi applications, includes setting lower and upper limit rates and regional quotas, adding pressure to conventional taxi businesses. Pefindo maintained a negative outlook for TAXI to anticipate further declines due to its tight liquidity position and the risk of refinancing bonds due in June 2019 worth IDR 1 trillion. In the first half of 2017, cash and cash equivalents fell 40.37 percent to IDR 9.69 billion.
Pefindo will lower the rate if the company’s credit profile deteriorates due to the inability to convert the drivers’ receivables into cash or a prolonged delay in the sale of non-productive assets. The company is currently in the process of debt restructuring to Bank Central Asia Tbk (BBCA) by selling the collateral in the form of land latest by November 2017. (*)