Kalbe to Sign $30 Mln Debt Pact, Get More Time to Pay

Kalbe to Sign $30 Mln Debt Pact, Get More Time to Pay

Bloomberg/Jakarta

PT Kalbe Farma, Indonesia's biggest drugmaker by sales, will
sign a US$30 million debt-restructuring agreement on Nov. 12,
getting a lower interest rate and more time to pay, Finance
Director Vidjongtius said.

Creditors will extend the maturity of the debt from 2005 to
2010 in an accord Vidjongtius said follows an Oct. 18 agreement
with lenders such as Royal Bank of Scotland Group Plc and ABN
Amro Holding NV to reschedule $57 million of Kalbe Farma loans.

"Kalbe will be able to save about a half million dollars a
year after the rescheduling, money which we can use to expand our
business," Vidjongtius said. He didn't give details of terms of
the agreement.

Demand is rising for products from Kalbe, which has a quarter
of the local market for non-prescription drugs, as faster
economic growth allows more of Indonesia's 235 million people to
seek treatment for common ailments. The Bekasi, West-Java based
company expects net income to increase 15 percent next year, more
than this year's expected rise of 10 percent, and sales to
advance 15 percent, Vidjongtius said.

"The debt restructuring allows the company to expand its
healthfood business, which is showing a stronger growth than its
drugs," said Ahmad Solihin, an analyst at Macquarie Securities in
Jakarta. Solihin said he is reviewing his "neutral" rating on the
stock.

Kalbe's net income rose 19 percent to Rp 334 billion ($37
million) in the first nine months of this year. The company
earlier said it expects full-year profit of Rp 355.2 billion.

"I'm quite surprised that the company's margin was actually
quite strong given the fact that the rupiah fell to more than
9,000 to the dollar," said Irene Foo, who helps manage the
equivalent of $2 billion of bonds and stocks in Asia for SG Asset
Management Pte in Singapore, including shares of Kalbe.

"In terms of product positioning, Kalbe has quite a good niche
in products such as healthfood, energy drinks and prescription
drugs," said Foo, who doesn't plan to buy more Kalbe shares
because of the stock's recent rally.

Kalbe shares, which gained 1 percent to Rp 525 at the 4 p.m.
close in Jakarta, have climbed 24 percent in the past month,
outperforming the benchmark Jakarta Composite Index, which gained
3.8 percent in the same period.

Indonesia's $208 billion economy, the biggest in Southeast
Asia, may expand 4.8 percent this year, the government forecasts.
It expects expansion of as much as 5.4 percent in 2005, the
fastest pace in nine years.

Kalbe plans to introduce three brands of over-the-counter
medicines and eight prescription drugs next year, and to double
spending to as much as Rp 200 billion.

It also plans to build a $45 million milk factory with Japan's
Morinaga Milk Industry Co. to expand its health-food business.
Kalbe will own 70 percent of the venture, the company said on
Nov. 1. The plant will start operating in the first half of 2007,
Vidjongtius said.

Kalbe will hold a shareholders meeting to obtain approval for
the milk plant on Nov. 29, the company said in a statement. Kalbe
plans to repay $4 million of debt within the next two months,
which would cut its outstanding debt to about $81 million.