Indofood plans bond issue to refinance debt<\/p>\n
Edhi Pranasidhi, Dow Jones, Jakarta<\/p>\n
PT Indofood Sukses Makmur, the world's largest instant noodle
\nmaker, said Tuesday that it's exploring the possibility of
\nissuing bonds to refinance higher interest rate bank loans and
\nfor investment.<\/p>\n
"We are exploring an idea of issuing bonds," Indofood Chief
\nExecutive Eva Riyanti Hutapea told Dow Jones Newswires. She gave
\nno further details, but the market expects the Indonesian
\ncompany, part of the huge Salim Group, to issue around Rp 1
\ntrillion (US$112 million) in local bonds.<\/p>\n
Falling interest rates locally means it's a good time to
\nrefinance some of its bank loans, Eva said. Currently Indofood
\nhas long-term foreign debt of $480 million and Rp 3 trillion in
\nrupiah loans.<\/p>\n
Interest rates on the central bank's benchmark one-month note
\nhave fallen to around 13 percent recently from a peak of almost
\n18 percent in 2001.<\/p>\n
Last year, the company issued $280 million in foreign bonds to
\nhelp refinance debt. That was the largest offshore bond issue
\nsince the 1997-98 Asian financial crisis.<\/p>\n
Indofood also wants fresh funds to finance investment plans
\nfor 2003, Eva said. The company is looking at buying palm oil
\nplantations but hasn't yet made any firm decisions, she added.<\/p>\n
"This year we are going to make investments," she said. "I'm
\nalways keen on palm-oil plantation companies."<\/p>\n
The company has said in the past it wanted to buy palm-oil
\ncompany PT Astra Agro Lestari. Apart from instant noodles,
\nIndofood also has a large cooking and edible oil business.<\/p>\n
But the Indonesian Bank Restructuring Agency, or IBRA, blocked
\nIndofood from making any acquisitions until the Salim Group had
\nrepaid its debts to the state.<\/p>\n
Indonesia's Salim family, which holds a direct 48 percent
\nstake in Indofood through its Hong Kong-listed First Pacific Co.
\nLtd., owes the government Rp 58 trillion stemming from the
\ncollapse of its bank during the Asian crisis.<\/p>\n
Salim handed more than a hundred companies to IBRA to help
\nrepay the debt but kept control of the crown jewel, Indofood. The
\ngovernment said recently it was considering to write off Salim's
\nobligations, even though the value of companies it handed to IBRA
\nhas fallen short of its debts.<\/p>\n
Falling consumer demand, due to slumping investment and rising
\nunemployment, is a risk for Indofood's financial performance in
\nthe year ahead, Eva said.<\/p>\n
But the company hopes to boost its sales volume by targeting
\nmiddle-income consumers. Traditionally, Indofood makes most of
\nits sales to lower-income consumers that account for the majority
\nof instant noodle purchases. Sales volume could grow by 10
\npercent this year over 2002 in an optimistic scenario, Eva said.<\/p>\n
Indofood made a net profit of Rp 651.9 billion in the first
\nnine months of 2002, up 16 percent from the same period of the
\nprevious year. Sales grew 11 percent to Rp 11.9 trillion in the
\nperiod. Full-year earnings figures for 2002 are due late next
\nmonth.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indofood-plans-bond-issue-to-refinance-debt-1447893297",
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