Indofood to issue Rp 1.5 trillion in bonds for refinancing, capital

Novia D. Rulistia ,  The Jakarta Post ,  Jakarta   |  Sat, 04/26/2008 12:02 PM  |  Business

The world's biggest producer of instant noodles, PT Indofood Sukses Makmur, will issue bonds worth a total of Rp 1.5 trillion (US$163 million) to fund debt refinancing and working capital.

Indofood director Thomas Tjhie said 82 percent of proceeds from the bonds would be used to repay its maturing bonds in June.

According to DBS Vickers Securities, one of Indofood's underwriters, Indofood will price its five-year bonds up to 1.1 percent more than the government's FR19 bond series, which will mature in 2013.

"The interest rates for the bonds will range between 0.75 percent to 1.1 percent above the FR19 series, which currently carries an average yield of 12.6 percent," DBS director for corporate finance Rusmin Kasim said.

The offering period will run from May 30 until June 3. The bonds will be listed on the Indonesia Stock Exchange on June 9.

Indofood's other underwriters for its bond issuance are PT Danareksa Sekuritas, PT ING Securities Indonesia, PT Kim Eng Securities and PT Mandiri Sekuritas.

"I am optimistic we can reach the subscription target because the bonds carry a very good idAA rating, or a stable outlook, from Indonesian rating company Pefindo," he said.

Last year, Indofood recorded a 26.96 percent increase in its sales to Rp 27.85 trillion from Rp 21.94 trillion in 2006.

The company also recorded a profit increase of 46.75 percent to Rp 2.8 trillion from Rp 1.97 trillion.

Indofood vice president Fransiscus Welirang said despite soaring international wheat and oil prices, the company would not increase the prices of its flour-based products immediately.

"We realize people's purchasing power is decreasing, but we aren't yet in a position to decide whether or not to increase the price. We may increase it later if the conditions are right," he said.

The sales of flour-based products account for around 35 percent of the company's total sales.

Fransiscus said the company was only slightly affected by the increase in crude oil prices because it had shifted to alternative sources and used mostly gas and coal for energy.

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