Sampoerna's bond coupons to range from 10.59 to 10.84%

The Jakarta Post, Jakarta

Cigarette giant PT Hanjaya Mandala Sampoerna started a week-long book building process on Tuesday for its planned Rp 1 trillion (US$108.93 million) bond issue, the proceeds of which will be used to finance maturing bonds.

Sampoerna director Angky Camaro said the unsecured bonds would bear a fixed rate of interest, with indicative coupons ranging from 10.59 percent to 10.84 percent. The bonds will mature within five years.

"The proceeds from this bond sale will be used to finance maturing debts from our first bond sale in 2000 also worth Rp 1 trillion. The bonds will mature on Jan. 28 next year," he said during the public presentation for the upcoming bond sale.

The publicly-listed company will offer the bonds from Oct. 20 to Oct. 22, and expects to list the bonds on the Surabaya Stock Exchange on Oct. 28.

Angky added that HSBC Securities Indonesia, ABN Amro Asia Securities Indonesia and Mandiri Sekuritas had been appointed as the underwriters of the bonds, which have been rated AA+ by state-owned rating agency Pefindo.

Sampoerna, which is the third largest cigarette producer in the country with a 19.1 percent market share, notched up a 21 percent increase in sales to Rp 8.42 trillion during the first half of the year from Rp 6.97 trillion during the same period last year.

Its half-year net profit rose by 38 percent to Rp 1.09 trillion against Rp 790 billion in the corresponding period of 2003. Currently, it has outstanding debts of Rp 2.42 trillion.

The impressive growth, said Angky, was mainly attributable to the stable pricing environment in the industry.

National cigarette consumption experienced a 1.5 percent decline in 2003 from the previous year to 198 billion cigarettes. Demand recovered in late 2003 and consumption reached 106 billion cigarettes as of June.

No further company targets or projections were disclosed.

Elsewhere, Angky dismissed reports about Sampoerna's interest in buying the ailing state-owned air carrier, Merpati Nusantara Airlines.

"We have no interest in buying Merpati," he said, quickly adding that Sampoerna currently had no plans to expand its business into other areas.

Merpati plans to conduct a strategic sale this year to help pay its debts, followed by an initial public offering in 2006.

Sampoerna's core business is producing cigarettes, while some of its subsidiaries operate in the retail, printing and packaging, transportation, and property sectors.

Sampoerna's shares ended Rp 200 higher at Rp 6,000 on the Jakarta Stock Exchange on Tuesday.