Geo Energy’s move to improve financial flexibility at noteholders’ expense: Moody’s, Companies & Markets

Geo Energy’s move to improve financial flexibility at noteholders’ expense: Moody’s, Companies & Markets

Fri, May 22, 2020 - 5:30 PM INDONESIAN coal producer Geo Energy Resource's consent solicitation and tender offer will improve its financial flex

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Fri, May 22, 2020 – 5:30 PM

INDONESIAN coal producer Geo Energy Resource’s consent solicitation and tender offer will improve its financial flexibility at the expense of  noteholders, said credit rating agency Moody’s on Friday. 

Mainboard-listed Geo Energy on Thursday announced a consent solicitation to approve certain amendments to the indenture governing its 8 per cent senior notes due in August 2022.

One of the proposed amendments is to remove a put option that demands that Geo Energy or its subsidiary, Geo Coal International, buy back all outstanding notes if it fails to satisfy certain minimum coal reserve requirements by April 4, 2021. Geo Energy does not have sufficientcoal reserves at its two operating mines to prevent the put option.

The company, through its subsidiary, is also offering to repurchase by tender the US$154 million principal outstanding under these notes, at a price that is less than half of the par value. Noteholders who accept the tender offer will also be deemed to have granted consent to the company’s proposed amendments mentioned earlier.

Therefore, “the proposed amendments and the tender will provide Geo Energy with…



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