I Made Sentana

I Made Sentana
Dow Jones Newswires
Jakarta

Indonesia's shipping company PT Berlian Laju Tanker plans to
join a growing list of local companies by issuing bonds overseas
in the next two years to expand its business.

Berlian's finance director Kevin Wong told Dow Jones Newswires
in an interview that the company needs to raise between US$300
million and $400 million in the next two years to enlarge the
company's fleet.

In the past, Berlian has borrowed mostly from overseas banks,
but is now looking to diversify its funding. It has never issued
overseas bonds.

"We are looking at new ways to access the capital market,"
Wong said.

Several blue-chip firms - most recently Indofood Sukses Makmur
with a $280 million issue in June - have raised funds
successfully in the overseas bond market this year.

Foreign investors shunned Indonesian corporate debt for a
number of years after the 1997-98 Asian financial crisis, but the
recent turmoil in the U.S. has sent fund managers looking for
higher-yielding emerging market issues.

Indonesia's return to political stability under President
Megawati Soekarnoputri's one-year-old government, and a 16
percent appreciation in the rupiah currency against the dollar
over this period, has lured back many investors.

But only debt issued by state-owned companies, which carries
an implicit guarantee from the government, and a handful of blue-
chip companies can attract foreign money.

Berlian Tanker's Wong hopes the company can persuade investors
that the company's financial position makes it worth a look.

Berlian booked total assets of Rp 3.29 trillion (US$373
million) as of the end of last year, up from Rp 2.94 trillion a
year earlier. Revenues rose to Rp 875.89 billion from Rp 635.30
billion, with net profit jumping to Rp 112.83 billion from Rp
25.45 billion.

The company's debt-to-asset ratio was 0.67 at the end of 2001,
and debt-to-equity ratio was 2.04, reflecting a strong capability
to repay debt. By comparison, Indofood, the latest successful
Indonesian debt issuer, had a debt-to-equity ratio of 2.30 as of
March 31.

Pricing or the size of any issue is still a way off for
Berlian Tanker. Despite improving sentiment toward Indonesia,
investors still remain wary of possible future political
instability, and the country's poor legal system.

Berlian Tanker will have to issue at a high premium to attract
interest, analysts say. Indofood's five-year bonds carried a
coupon rate of 630 basis points over comparable U.S. Treasurys.

The company plans to use the proceeds to enlarge the company's
fleet from 40 ships currently. Some of the ships will carry
chemical cargos from the Middle East, a business Berlian Tanker
expects to increase in coming years.

Large chemical plants in the Middle East are expected to start
operations by 2005, with an extra total annual output of 10
million tons, Wong said. This is expected to create more business
for shipping companies.

The company plans to spend $115 million to build eight
chemical tankers to meet this expected rise in demand, he added.

Berlian Tanker is also vying for more shipping contracts from
its major oil shipment client, Indonesian state oil-and-gas
company Pertamina. It's currently on a short list for a contract
to supply 12 ships to Pertamina over the next two years.
Pertamina is expected to award the contracts in September, Wong
said.