Semen Gresik to issue Rp 1.2 trillion in bonds<\/p>\n
JAKARTA (JP): Publicly listed state cement producer PT Semen
\nGresik said it would issue up to Rp 1.2 trillion (about US$125
\nmillion) in domestic bonds in the first semester of this year to
\nraise funds to repay its debts.<\/p>\n
During the company's extraordinary shareholders meeting on
\nFriday, the plan to issue the domestic bonds was approved, as was
\nthe replacement of one of the company's commissioners.<\/p>\n
Semen Gresik president Urip Timuryono said his company planned
\nto use the funds from the bonds to repay part of its medium-term
\nnotes I and II, which have a price of $162.21 million and Rp
\n214.6 billion, respectively.<\/p>\n
Payment for note I falls due in January next year, while note
\nII will mature in April of the same year, he said.<\/p>\n
\"Semen Gresik is acting on prudential principles in this
\nrefinancing scheme, and the company is confident it can meet its
\nobligations to creditors,\" Urip said during a media conference
\nfollowing the shareholders meeting.<\/p>\n
He said the coupon rates on the bonds had yet to be decided,
\nbut added they would reflect the bonds' rating and market
\nconditions.<\/p>\n
State rating agency PT Pefindo, he said, was in the process of
\nrating Semen Gresik's bonds.<\/p>\n
\"We prefer to have fixed rates instead of floating ones,\" Urip
\nadded.<\/p>\n
Assuming an exchange rate of Rp 9,500 to the U.S. dollar,
\npayment for notes I and II will total Rp 1.7 trillion, he said.<\/p>\n
Because the bond issue will only raise Rp 1.2 trillion, he
\nsaid Semen Gresik would repay the remaining Rp 500 billion of the
\nnotes from internal sources.<\/p>\n
A press statement from the company said bonds were chosen as
\nthe method to finance the notes because they were less costly
\nthan other sources of financing, such as loans.<\/p>\n
Semen Gresik issued medium-term notes I and II in 1997 to help
\nfinance the construction of its Tuban II cement plant.<\/p>\n
Initially, the company had its U.S. dollar-denominated note
\nhedged, but financing problems in 1998 made it unable to extend
\nthe hedging.<\/p>\n
Urip dismissed worries about repaying unhedged U.S. dollar-
\ndenominated loans with the local currency.<\/p>\n
\"We have factored in the risk of currency fluctuations, which
\nis why we are assuming a 9,500 exchange rate to the dollar,\" he
\nsaid.<\/p>\n
Asked whether the local market could absorb Rp 1.2 trillion
\nworth of bonds, he said underwriters had made a \"full
\ncommitment\" to the bond issue, meaning the underwriters would buy
\nup all the bonds not taken by investors.<\/p>\n
The underwriters include PT Danareksa Securities, PT Bahana
\nSecurities and PT Citicorp Securities Indonesia.<\/p>\n
Urip also gave assurances that the government's plan to spin
\noff Semen Gresik's subsidiaries PT Semen Padang and PT Semen
\nTonasa would have no impact on the bonds issue.<\/p>\n
The bonds concern only Semen Gresik and have nothing to do
\nwith the consolidated operations of its subsidiaries, he said.<\/p>\n
The government plans to spin off the two subsidiaries in
\nresponse to protests from the local communities near Semen Padang
\nin West Sumatra and Semen Tonasa in South Sulawesi.<\/p>\n
Locals demanded the spin-off because of worries over the
\nforeign ownership in Semen Gresik.<\/p>\n
The Semen Gresik Group, which includes Semen Padang and Semen
\nTonasa, is 25 percent owned by the Mexican-based PT Cemex
\nIndonesia, which has long expressed its desire to increase its
\nstake in the company.<\/p>\n
\"It will make no difference whether the spin-off occurs or
\nnot, we will go ahead anyway and issue the bonds,\" Urip said.<\/p>\n
Cemex president Fransisco Noriega said no progress had been
\nmade in the plan to spin off the companies since the government
\nunveiled the scheme last year, without revealing how it planned
\nto achieve the spin-off.<\/p>\n
\"We are still waiting for their proposal,\" he said.<\/p>\n
The government owns a 51 percent stake in Semen Gresik, Cemex
\nhas a 25.53 percent stake and the public owns the remaining 23.46
\npercent. (bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/semen-gresik-to-issue-rp-12-trillion-in-bonds-1447893297",
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