Govt urges Tongkang to drop bond plan

Govt urges Tongkang to drop bond plan

The Jakarta Post, Jakarta

State Minister of State Enterprises Laksamana Sukardi said on
Monday that he would ask PT Pertamina Tongkang, the shipping unit
of state-owned oil and gas company PT Pertamina, to drop its plan
to issue bonds.

"Tongkang is just a supporting company for Pertamina, they
don't need to issue bonds. It is Pertamina as the controlling
company that can issue them," said Laksamana without further
elaboration.

He also said that the interest rate carried by the bonds was
too expensive, which in turn would heavily burden Pertamina.

He added that Tongkang's debt to equity ratio was already too
high.

Laksamana is also the new chief commissioner of Pertamina.

Tongkang is finalizing plans to issue rupiah and dollar
denominated bonds worth Rp 225 billion (US$26.5 million) and $90
million respectively in the local and international market. The
proceeds will be used to finance ship purchases and for working
capital.

The dollar bond will have a tenor of seven years, while the
rupiah bond an eight-year tenor. Both issues will be listed on
the Surabaya Stock Exchange on Nov. 7.

Coupons for the two tranches have not yet been decided.

PT Citigroup Securities Indonesia and PT Bahana Securities are
joint-lead underwriters for the issue.