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.