Indofood set for buyback as net profit down<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Losing some 37 percent of its net profit last year due to foreign
\nexchange losses, PT Indofood Sukses Makmur -- the world's largest
\ninstant noodle maker -- is counting on a planned buyback of its
\nEurobonds as part of its debt management program to avoid similar
\nlosses in the future.<\/p>\n
Although experiencing a slight increase in last year's gross
\nprofit to Rp 4.6 trillion (US$492.24 million) from Rp 4.5
\ntrillion in 2003, Indofood's net profit dropped to Rp 378.1
\nbillion from Rp 603.5 million in 2003.<\/p>\n
The average exchange rate as of Dec. 31, 2004, stood at Rp
\n8,978, compared to the 2003 rate of Rp 8,574 for the same period.
\nThe weakening rupiah caused the company to lose Rp 296.9 billion.<\/p>\n
"We are trying to lessen foreign exchange exposure by
\nrestructuring our debts," Indofood director Thomas Tjhie said on
\nThursday, adding that by buying back US$280 million of its
\nEurobonds, the company would have less foreign exchange outlay.
\nPreviously, Indofood bought back its Guaranteed Notes worth $30
\nmillion.<\/p>\n
The company's total foreign debts dropped to $240 million from
\n$317 million in 2004.<\/p>\n
Indofood plans to redeem the bonds, which were sold in June
\n2002 by Indofood International Finance Ltd., a wholly-owned
\nsubsidiary domiciled in Mauritius, to avoid higher tax of 20
\npercent compared to 10 percent previously as a result of the
\ncancellation of the tax treaty between Indonesia and Mauritius.<\/p>\n
Through its Mauritius-based subsidiary, Indofood bought back
\n$86.2 million of its Eurobonds at a price of 102. The company
\nplanned to buy the rest of its bonds at a par price of 100, if
\nthe English court confirms its redemption plea.<\/p>\n
A clause in the Eurobond contract states that the issuer has
\nthe right to redeem its bonds at a par price -- the same price as
\nwhen the bonds were on sale -- if a change occurs in tax that
\nwould lead to increased cost, Thomas explained.<\/p>\n
"We hope that by the end of April there will be a confirmation
\non our redemption rights," he said. As previously reported, the
\ncompany will issue Rp 1.75 trillion in bonds to finance the
\nbuying back of its dollar-denominated Eurobonds due to mature in
\n2007.<\/p>\n
"The issuance of the rupiah bonds will be done as soon as
\nthere is confirmation from the English court," he said. "If the
\ndecision comes by the end of April, we will issue the rupiah
\nbonds in the first semester of 2005 at the latest."<\/p>\n
Aside from planning to buy back its Eurobonds, Indofood also
\nplans to spin off one of its major subsidiaries, PT Bogasari
\nSentra Flour Mills, said Indofood vice president director
\nFransiscus Welirang.<\/p>\n
"As soon as the statutory process with the investment
\ncoordinating board is finished, we will sell between 10 percent
\nand 15 percent of our stake," he said.<\/p>\n
After all the efforts have been gone through, the company
\nprojects that its net profit will increase to Rp 600 billion
\nafter targeted consolidated sales of Rp 19 trillion have been
\nreached.<\/p>\n
Last year, the company reported consolidated sales of Rp 17.9
\ntrillion, with the sales of instant noodles, flour and edible
\nfats and oils being the major contributors, with shares of 33
\npercent, 33 percent and 19 percent respectively. (003)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indofood-set-for-buyback-as-net-profit-down-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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