PT Semen Gresik to only issue 50% of planned bonds

PT Semen Gresik to only issue 50% of planned bonds

JAKARTA (JP): Publicly listed cement producer PT Semen Gresik
will only issue half of its planned Rp 1.2 trillion, due to the
unfavorable condition in the local bond market, the company's
president, Urip Timuryonohere said on Thursday.

"With the current weak market, we have no other choice but to
reduce our bond issuance," Urip told a media conference after a
business presentation with potential bond buyers.

The company will use funds raised from the bonds to repay part
of its debt worth about Rp 2 trillion maturing next year, he
said.

Of Semen Gresik's total debts, US$162.2 million will mature in
January next year in medium-term notes I and Rp 214 billion due
in April in medium-term notes II.

Semen Gresik issued medium-term notes I and II in 1997 to help
finance the construction of its Tuban II cement plant.

Urip said that Semen Gresik would raise about Rp 700 billion
in a syndicated loan, in addition to using its own funds worth
about Rp 700 billion to repay its remaining debts.

"We'll sign a loan agreement by the end of June," he said,
adding that the syndicated loan, to be arranged by state-owned
Bank Mandiri, would be available in January.

He said that Semen Gresik bonds I, to be offered to the public
from July 5 through July 9, have received an A rating with a
stable outlook from the local rating agency, Pefindo,

The five-year bonds, which will be listed on the Surabaya
Stock Exchange on July 17, will be issued in two different forms:
Series A and Series B.

Series A will carry a fixed interest rate of between 19.625
percent per annum, of which the company will repay Rp 120 billion
in the third year. The interest rate of Series B will be fixed at
20.375 percent in the first year, 20 percent in the second,
19.625 percent in the third, 19.125 percent in the fourth and 19
percent in the fifth and final year.

State-owned securities company PT Danareksa Sekuritas, PT
Bahana Securities will co-underwrite the bond offering.

He said that the company pledged its factory Tuban I, worth
200 percent of the nominal value of the bonds, to act as a
guarantee.

The company's sales in the first quarter rose 36 percent to Rp
994.97 billion from Rp 734.15 billion in the same period last
year.

The company's net profit also increased by 14 percent to Rp
121.6 billion ($11 million) during the first quarter of the year,
up from Rp 106.6 billion.

Urip added that the volume of sales also surged by about 20
percent, though he didn't provide any figures.

The government owns a 51 percent stake in Semen Gresik,
Mexican-based PT Cemex Indonesia owns a 25.53 percent stake and
the remaining 23.46 percent is publicly owned. (05)