SG to refinance Rp 1t in debt

Evi Mariani, The Jakarta Post, Jakarta

Publicly listed cement manufacturer PT Semen Gresik (SG) hopes to generate new loans of about Rp 1 trillion (about US$122 million) bearing lower interest rates in order to refinance its more expensive debts.

SG president Satriyo said on the sidelines of a shareholders meeting on Friday that the company would generate the new loans by issuing new bonds and borrowing from other sources.

"Semen Gresik and its subsidiaries Semen Padang and Semen Tonasa need about Rp 1 trillion for the debt refinancing. So far we have received an offer from a local financial institution to help us issue bonds worth Rp 500 billion," he said.

He did not identify the underwriter or provide a schedule for the bond offering.

This step would ease SG's debt burden because the interest rates of the new loans would be lower, in line with the steady decline in the interest rate on the one-month Bank Indonesia SBI promissory notes, to 9.53 percent from 13 percent early this year.

The decline in the benchmark interest rate has prompted commercial banks to lower their deposit rates while their lending rates remain high. In response, indebted companies have been rushing to issue bonds to take advantage of the declining rate.

According to a company report, as of 2002 SG's debts reached about Rp 1.4 trillion, of which Rp 790 billion was in banking loans and Rp 600 billion in bonds.

SG's refinancing plan was agreed on by the shareholders during their meeting, which also approved the company's dividend payments after the expected completion of its 2002 financial report by September.

Since the end of March, the state-owned cement producer has been fined Rp 1 million a day by the Capital Market Supervisory Agency because of the failure of its subsidiary, Semen Padang, to file an audited financial report.

Based on capital market regulations, publicly listed companies have to submit audited annual financial reports by the end of the first quarter.

It was also agreed during the meeting on Friday to appoint Zainal Arifin as president commissioner, replacing Hatanto Reksodipoetro, and Ignacio Ortiz as the new commissioner representing Cemex Asia Holdings Ltd of Mexico. He replaces Fernando A. Gonzalez.

SG is 51 percent owned by the state, 23.46 percent by the public and 25.54 percent by Cemex Asia Holdings Ltd.

The shareholders and the SG executives plan to hold another meeting in September, assuming the company's financial report has already been completed.