Malaysian Sime Darby, Japan's Mitsubishi Corporation, Tokyu Land and Hong Kong Land have also signed deals in Jakarta and surrounding areas.
KUALA LUMPUR: Moody's Investors Service has placed on review for downgrade of Sime Darby Bhd
's issuer and debt ratings after the conglomerate announced plans to list its plantation and property businesses.
The international ratings agency said on Friday the listing of of the two businesses would lead to reduced diversification, scale and cash flows, and therefore a weaker credit profile.
Moody's had placed on review for downgrade the Baa1 issuer rating of Sime Darby and Baa1 senior unsecured debt rating on the Sukuk issued by the unit Sime Darby Global Bhd.
It also placed on review for downgrade the (P)Baa1 rating on the senior unsecured medium-term note program of Sime Darby Global.
On Jan 26, 2017, Sime Darby announced a plan to create three standalone businesses by listing its plantation and property divisions on Bursa Securities Malaysia, while retaining its motors and ondustrial divisions under the existing Sime Darby Bhd.
Sime Darby's management is evaluating implementation measures and the time needed to effect the plan.
"While there is no clarity on how the plan will be implemented, we believe the listing of Sime Darby's Plantation and Property businesses will lead to reduced diversification, scale and cash flows, and therefore a weaker credit profile," said Jacintha Poh, a Moody's vice president and senior analyst.
Moody's review for downgrade will assess the specifics of the transaction, once the details of Sime Darby's plans are available.
In particular, Moody's will focus on how existing debt will be allocated across the three entities, and the company's financial policy, capital structure, cash flow and liquidity profiles, as well as ongoing business prospects post the transaction.
The review will conclude once there is clarity on the transaction structure and certainty of the implementation.
For the first quarter ended Sept 30, 2016, Sime Darby generated around 42% of its reported profit before interest and tax from its plantation segment, around 27% from property and the remaining from motors, industrial and other businesses.
At midday, Sime Darby's share price was up two sen to RM9.06.
