Modern Bank to float Rp 100b in bonds

JAKARTA (JP): Modern Bank, a bank listed on the Jakarta Stock Exchange, plans to float five-year bonds worth Rp 100 billion (US$44.64 million).

Bank president Bobby Sudarso said the bonds, which will mature on Oct. 25, 2000, will be listed on the Surabaya Stock Exchange in mid-October.

The lead underwriter of the bond issuance is PT Trimegah Securindolestari, with state-owned Bank Negara Indonesia (BNI) acting as trustee.

Bobby said that approximately 30 percent of the proceeds of the bonds issuance would be used to expand the bank's working capital credits, while the remainder would be used for investment credits, including housing loans.

He said that the debt instruments, the first to be issued by the bank, would be sold at par and would carry a fixed interest rate of between 17 and 18 percent for the first year and a floating rate from the second year onward.

"The fifth to the 12th coupons of the bonds will carry a floating rate of 1.5 percent per annum above the average of the six-month IRSOR (Indonesian Rupiah Currency Swap Offer Rate)," he said, adding that the 13th to the 20th coupons would offer a floating rate of 2 percent above the six-month IRSOR.

Bobby said holders of the bonds would have a put option in the third year.

"A put option means a right to cash the bonds in during the fourth quarter of the third year if the bond holder is not satisfied with the floating rate, which will be announced by the trustee on July 25, 1998," he said.

He added that bond holders would be able to exercise their put option rights between Aug. 1 and Aug. 15, 1998, with payment being made between Oct. 5 and Oct. 9.

Modern Bank, which recorded total assets of Rp 1.3 trillion as of June, gained a net profit of Rp 9.6 billion in the first six months of this year. It is 82.33 percent owned by PT Inti Putra Modern, 15.83 percent by the investing public and the rest by a number of individual shareholders.(31)