Marubeni agrees to buy Indomobil bonds

Marubeni agrees to buy Indomobil bonds

JAKARTA (JP): Marubeni Corporation, a major Japanese trading house, has agreed to buy convertible bonds worth US$100 million from PT Indomobil Investment Corporation, the holding company of the Salim Group's automotive division.

An assistant to Indomobil's managing director, Freddy Sutrisno, said here yesterday that his company will use the proceeds from the convertible bond issuance to finance its expansion projects, which will include the modernization of its production facilities, the expansion of its production capacity, the strengthening of its marketing networks and the improvement of its after-sale service capability.

Indomobil controls 70 companies operating in the assembly and distribution of Suzuki, Hino, Mazda, Nissan and Volvo vehicles. It gained a 20 percent share in the Indonesian automotive market in 1994.

Freddy said the convertible bonds, with a maturity period of three years, offer an interest of 3.5 percent per year which will be paid every six months.

The issuance of the convertible bonds for Marubeni under the agreement, signed here on Wednesday, is a step toward the realization of Indomobil's plan to offer new shares to the public in late 1996 or early 1997, he said.

Under the agreement, "Marubeni may convert the bonds into ordinary shares of Indomobil when it's go-public plan is realized," he explained.

An industrial source said that if the Indomobil bonds are converted into equity, Marubeni will hold a stake of about 25 percent of Indomobil.

Marubeni will also continue regular discussions with the Salim Group on expanding their alliance to include the heavy electrical and telecommunications business, the spokesman said. (riz)