Lonsum to issue $100m in bonds for expansion

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.