Fri, 02 Jun 2006

Jasa Marga looking to IPO in Q4

Rendi Akhmad Witular, The Jakarta Post, Jakarta

After several delays caused by regulatory uncertainties, state-owned turnpike operator PT Jasa Marga is now gearing up to go public via an initial public offering in the fourth quarter of this year.

The firm is expected to sell up to 20 percent of its stock and hopes to raise between Rp 1.5 trillion (US$163 million) and Rp 2 trillion in proceeds.

"The State Ministry for State Enterprises is currently making preparations to put the plan into effect. We expect to appoint underwriters in July," said Jasa Marga's newly appointed president director, Frans Satyaki Sunito, on Thursday.

The proceeds from the IPO will be used to finance the construction of three expressways between Semarang and Solo in Central Java (77 kilometers), Gempol and Pasuruan in East Java (32 kilometers) and the Bogor Ring Road in West Java (11 kilometers).

The projects will cost up to Rp 70 billion per kilometer, including the cost of land acquisition and interest.

Frans said the first phase construction of the three projects was scheduled to be completed in 2009 at a total estimated cost of about Rp 2.5 trillion. The company would also seek bank loans to help finance the projects.

He said the company was also considering bidding for the 12-kilometer-long Jakarta Outer Ring Road II project, which was expected to cost about Rp 850 billion.

Jasa Marga, which manages 456 kilometers of the country's total of 590 kilometers of toll roads, is currently offering Rp 1 trillion worth of bonds with an indicative interest rate of between 12.5 and 13.2 percent.

The company has appointed Bahana Securities to arrange its 22nd bond sale, which will have a maturity of 10 years, and has received a rating of A+ (stable outlook) from local rating company PT Pefindo.

Frans said the proceeds from the bonds would be used to help refinance the company's maturing bank debt.

With assets of about Rp 9.7 trillion last year, Jasa Marga booked operating revenue of Rp 1.92 trillion and a net profit of Rp 293 billion. In 2004, the company's operating revenue stood at Rp 1.63 trillion, while its net profit came in at Rp 231 billion.

For this year, the company is targeting operating revenue of Rp 2.5 trillion and a net profit of about Rp 305 billion.

Key concerns faced by the company in its operations include the failure by the government to finally specify the concession periods for its existing turnpikes, and the possibility of higher interest costs as around 60 percent of its loans carry floating rates.

The company is also facing delays in land acquisition for turnpike expansion, triggering business uncertainty and project-cost inflation.