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.