Lonsum to issue $100m in bonds for expansion

Rendi A. Witular, The Jakarta Post, Jakarta

Publicly listed plantation company PT PP London Sumatra Indonesia (Lonsum) plans to issue bonds or sell some of its shares via a rights issue to finance the expansion of its plantations and the construction of new oil palm mills.

The amount of the bonds or rights issue planned by the company next year might reach about US$100 million, according to Lonsum sales and information system director Zafril Ansgar Hamzah.

"We are still studying the best options to finance our expansion. It could be from bonds or rights issue, but for sure, the amount will reach approximately $100 million," said Zafril in a meeting with investors and media on Thursday.

Zafril said the company's expansion plan for next year would cover the purchase of some plantations in South Sumatra and East Kalimantan and the construction of new oil palm mills to increase installed capacity of the current mills.

However, Zafril refused to disclose the amount of plantations the company might purchase next year nor the amount of the planned capacity for its mills.

At present, the company manages 48 plantation estates with a total land of 135,864 hectares, while the installed capacity for the company's mills is about 1.5 million tons per year.

Lonsum, which was once controlled by tycoon Ibrahim Risjad, is expecting sales revenues to reach Rp 1.93 trillion (US$214 million) next year, up from this year's estimation of Rp 1.65 trillion.

The company is also projecting net profit to increase to Rp 332 billion next year, from an estimated loss this year due to the company's debt restructuring worth $228 million in the first semester.

As for crude palm oil (CPO) production, the company is expected to produce some 450,000 tons of CPO next year, up from an estimated 345,080 tons this year, following the acquisition of assets belonging to plantation company PT Pan Lonsum for Rp 520 billion early this month.