Moody’s upgrades Adaro to Ba1

Hong Kong, August 03, 2009 -- Moody's Investors Service has today upgraded 
the local currency corporate family rating for PT Adaro Indonesia 
("Adaro") to Ba1 from Ba2. 

"The upgrade acknowledges Adaro's strong and improving operating and 
financial profile which has been aided by increasing ASP's as well as 
efforts to improve efficiencies and reduce costs," says Laura Acres, a 
Moody's Vice President. 

Such strengths have been manifest in the generation of positive free cash
flows over the last few years which have been primarily applied to 
reducing total adjusted debt such that debt has fallen by more than 40%
since year-end 2006. As a result, Adaro's EBITDA/interest coverage has 
increased to 19x as of March 2009 from 1.7x, while its adjusted 
debt/EBITDA ratio has fallen to 0.9x from 3.3x during the same period. 

Adaro's Ba1 rating reflects: 1) its status as one of the world's
lowest-cost producers and exporters of coal, with a long concession life 
(to 2022); 2) the quality of its customer base, as represented by large 
utilities with excellent payment records; 3) its well established 
operations, with a record of consistent production growth and 
deleveraging; 4) ability to lock in customers, in terms of volume, for 
substantial proportions of forward production; and 5) strong financial 
profile.

At the same time, the rating recognizes key challenges such as a lack of 
diversification given Adaro's single site and product, as well as issues 
pertaining to the regulatory environment and emerging market risks 
arising from operating in Indonesia as captured by the country ceiling of 
Ba2/stable.

The stable outlook reflects our expectation that Adaro will maintain its
operating and financial profile.

The possibility of upward pressure is limited given that Adaro is one of 
the most highly rated single commodity mining companies globally;
furthermore, its revenue base remains relatively small and the company
lacks production diversity compared with similarly rated global peers. 

Adaro's financial metrics are strong for the rating level therefore
downward pressure on the rating is most likely to come about should Adaro 
experience material disruption to its operations, or industry 
fundamentals deteriorate to the extent that Adaro's ability to service 
its debt is compromised, Moody's considers the likelihood of this as low
over the near to medium term..

Other negative rating trends include: 1) event risk as a result of any 
adverse decision regarding the off-setting of VAT payments; 2) any change 
in laws and regulations, particularly on the mining concessions, that 
would adversely affect the business; and 3) any abrupt change in 
financial strategy and/or dividend policies.

The principal methodology used in rating Adaro was the Global Mining 
Industry dated May 2009, which can be found at www.moodys.com in the 
Credit Policy & Methodologies directory, in the Ratings Methodologies 
subdirectory. Other methodologies and factors that may have been 
considered in the process of rating this issuer can also be found in the 
Credit Policy & Methodologies directory.

The last rating action was taken on 29th January 2008 when Adaro's local 
currency corporate family rating was upgraded to Ba2/stable.

Adaro is one of the largest single site coal producers in the southern
hemisphere and one of the world's largest sub-bituminous coal companies.
It exports approximately 77% of its products to Southeast Asia, the US 
and Europe, while the rest is for the domestic market.