Pakuwon Jati to issue bonds
JAKARTA (JP): PT Pakuwon Jati, a Surabaya-based property developer, said yesterday it will issue bonds worth Rp 200 billion (US$85.3 million) to finance the development of a new shopping mall in Surabaya, East Java.
The bonds have a term of five years, with a fixed interest rate.
"We prefer a fixed rate with an assumption that bondholders can make profits not only in terms of interest payments, but also capital gains, because the bonds can be traded on the Surabaya Stock Exchange," a director of the lead underwriting company PT Sigma Batara, Eko Ganefianto, told journalists yesterday.
Eko declined an assumption that investors would not get much benefit if the coupon rate was fixed for the whole five years.
"We need a few days more to determine the fixed rate," he added.
Meanwhile, a Pakuwon Jati director, Omar Ishananto, said that the planed mall, to be called "Pakuwon Megamall", needs total funds of Rp 289.8 billion. Therefore, the company will provide the other Rp 89.8 billion from its own equity.
Omar said that Pakuwon Megamall will be built on a 23-hectare plot on Jl. Major General Sungkono in West Surabaya. The mall will have a total space of 215,000 square meters.
To guarantee the bonds, Pakuwon has two sources of funds: the expected net revenue from the megamall's rental payments and its insurance premium, he said.
"We expect to gain net rental payments of Rp 250 billion in the first five years," Omar said.
He added that Pakuwon Jati has gained rental commitments for 60 percent of the total space in the planned megamall. PT Matahari, a retailing firm, will be the largest tenant, with a 20-year contract.
Pakuwon Jati, set up in 1986, has built three shopping centers: the eight-floor Tunjungan Plaza I (which commenced operation in 1986), the 17-floor Tunjungan Plaza II (1991) and Tunjungan Plaza III (earlier this year), all located in "Pakuwon City" in Surabaya.
Omar confirmed yesterday that early next month, his company will break the ground for the construction of its Tunjungan Plaza IV, an integrated shopping center with a 212-room star-rated hotel. (alo)