Indofood sets coupon rate for bonds

Zakki P. Hakim, Jakarta

The country's largest instant noodle maker PT Indofood Sukses Makmur said it had set an indicative coupon rate of between 11.5 percent and 12 percent for its planned Rp 1 trillion bond issue.

This is lower than the 13.5 percent coupon set for the company's Rp 1.5 trillion bond issue in May last year.

The publicly listed Indofood held a meeting with investors on Tuesday to unveil details about the bond plan, and started a book building process to determine the coupon rate.

The company told investors that the book building process would end on June 17.

The bonds will be offered to investors from July 1 to July 6. The bonds will be listed on the Surabaya Stock Exchange on July 13.

Indofood said in a prospectus that 75 percent of the proceeds from the bond issue would be used to repay dollar-denominated debts, and the remainder to repay rupiah debts.

The company currently has US$392 million and Rp 3.9 trillion in debts.

The company will be able to issue new bonds at a lower coupon rate as domestic interest rates have dropped significantly. The central bank benchmark interest rate, for instance, has declined to around 7.33 percent from over 13 percent at the end of 2002.

PT Trimegah Securities, PT Bahana Securities and PT Danareksa Sekuritas have been appointed as the underwriters for the new bond issue plan.

Indofood recorded net sales of Rp 17.87 trillion (US$1.98 billion) last year. The company's main businesses are instant noodles, cooking oil and flour.