WOM, Oto to issue bonds next year

WOM, Oto to issue bonds next year

Rendi A. Witular, The Jakarta Post/Jakarta

Motorcycle financing firm PT Wahana Ottomitra Multiartha (WOM)
and car financing firm PT Oto Multiartha plan to issue bonds next
year to expand their financing capabilities amid a projected
record-high demand for vehicles.

WOM will issue between Rp 700 billion (US$77.7 million) and Rp
800 million worth of bonds in the second quarter of next year,
while Oto Multiartha will issue about Rp 600 billion in bonds
early next year.

"The bond issue is part of our effort to increase our
motorcycle financing by 20 percent next year," WOM president
director Benny Wennas said on Thursday.

The company has targeted a total lending amount of about Rp 3
trillion next year, up from this year's estimated Rp 2.25
trillion. The company is also targeting a doubling of its net
profit to Rp 200 billion next year from a projected Rp 100
billion this year.

New motorcycle sales next year are estimated to grow by 25
percent to about five million units from this year's projection
of some four million units, the highest since the economic crisis
in 1997.

WOM also sold 200 million of its shares, or about a 10 percent
stake in the company, to the public via an initial public
offering in October.

Benny said the company made about Rp 140 billion from the IPO,
with a price of Rp 700 per share. The company is scheduled to
list its shares on the Jakarta Stock Exchange on Dec. 13.

WOM recently signed a conditional sales and purchase agreement
with Bank Internasional Indonesia, the nation's sixth largest
lender by assets, to sell a 75 percent stake in the company to
the bank.

Projected higher economic growth next year, along with lower
interest rates, is expected to benefit both motorcycle and car
sales. Car sales are expected to grow to 420,000 units this year
and 490,000 units next year.

The Indonesian economy, the largest in Southeast Asia, is
expected to grow 5.5 percent next year from an estimated 5
percent this year.

Himawan Gunadi, a director with DBS Vickers Securities
Indonesia, said the company had been appointed by Oto Multiartha
to arrange its bond sale, along with Investindo Nusantara
Securities and HSBC Securities.

In 2003 and 2004, Oto Multiartha issued Rp 300 billion and Rp
400 billion worth of bonds, respectively.

"Corporate bond issues next year will be dominated by
financing companies, following expected higher purchasing power
amid higher economic growth and lower interest rates," said
Himawan.