Fitch Ratings has downgraded Malaysia-based energy-service provider Serba Dinamik Holdings Berhad's (SDHB) Long-Term Issuer Default Rating (IDR) to 'D' from 'RD'.

The 'D' IDR reflects Fitch's view that the Kuala Lumpur High Court's decision to appoint an interim liquidator to control the company's affairs until permanent liquidator is confirmed constitutes the beginning of the winding up process.

Simultaneously, Fitch is withdrawing SDHB's IDR and Recovery Rating as the company has chosen to stop participating in the rating process. Therefore, Fitch will no longer have sufficient information to maintain the ratings. Accordingly, Fitch will no longer provide ratings or analytical coverage for SDHB

Key Rating Drivers

High Court Decision: The Kuala Lumpur High Court appointed an interim liquidator to take control of SDHB and three subsidiaries after the oil and gas company breached a consent order that required it to start repaying a syndicated loan owed to six banks. The interim liquidator will have power to control the companies' affairs until the full appointment of a liquidator to kick-start a full winding-up process.

ESG - Governance: Management Strategy and Financial Transparency: SDHB is subject to an ongoing independent review requested by its auditors. In addition, there has been a delay in the publication of its audited financial reports.

RATING SENSITIVITIES

Ratings sensitivities do not apply, as the ratings have been withdrawn.

Best/Worst Case Rating Scenario

International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

Issuer Profile

SDHB is one of Malaysia's leading oil-and-gas service and equipment companies. It has operational facilities in Malaysia, Indonesia and United Arab Emirates .

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

SDHB has an ESG Relevance Score of '4' for Management Strategy due to an independent review requested by its auditors, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

SDHB has an ESG Relevance Score of '4' for Financial Transparency due to a delay in publishing audited financial results, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.

(C) 2022 Electronic News Publishing, source ENP Newswire