Indofood offers fixed-rate bonds worth Rp 1t
Indofood offers fixed-rate bonds worth Rp 1t
Rendi A. Witular, The Jakarta Post, Jakarta
Giant food conglomerate PT Indofood Sukses Makmur said on Wednesday that the indicative fixed interest rate of its planned Rp 1 trillion (about US$115 million) bond issue would be in the range of 13.25-13.75 percent.
The publicly-listed company will offer the bond from June 3 to June 5, and will list it on the Surabaya Stock Exchange on June 12.
Indofood president Eva Rianti Hutapea said that issue was meant to convert bank loans into longer-term debt carrying lower interest.
"The bond issue is part of our debt management strategy. With the latest bond issue, we expect to save around Rp 30 billion in interest on debts this year," she told the press following a public expose.
The Indofood five-year bond has received a AA+ rating with a stable outlook from local rating agency PT Pefindo.
Indofood's debt interest this year will reach around Rp 900 billion.
As of the first quarter of this year Indofood's outstanding debts amounted to $435 million and Rp 3.4 trillion. Some $81 million and Rp 356 billion will mature this year.
PT ING Securities Indonesia, PT Mandiri Sekuritas, PT Bahana Securities and PT Danareksa Sekuritas are the underwriters for the issue.
Eva also said that the company planned to issue further bonds worth less than Rp 1 trillion this year to help finance the expansion of its retail chain.
Indofood sales in the first quarter of this year rose by 10 percent to Rp 4.3 trillion compared to the same period last year.
However, net profit declined to Rp 202 billion from Rp 309 due to higher interest expenses, which reached Rp 246 billion.
Noodles are still the main pillar of Indofood's business with a 55 percent contribution to net profit, followed by flour (22 percent), edible oil and fats (19 percent) and miscellaneous items such as snacks and baby food (6 percent).
Indofood, the world's biggest noodle producer, last year sold Rp 9.9 billion packages of instant noodles and expects a rise in sales of 7 percent this year.
Indofood is targeting an overall increase in sales for this year of at least 15 percent.
The company also expects to raise the price of its products for high-end consumers this year to cope with rising production and utility costs, but there is no plan to increase the price of products consumed by lower and middle income people.