Arpeni focuses on debt to stay afloat

Maritime transportation service provider PT Arpeni Pratama Ocean Line Tbk says it will focus on improving its financial performance by paying off its debts this year as the company faces the threat of being delisted from the bourse.

The company recently performed bond buybacks amounting US$67.9 million as part of a debt restructuring program using funds raised from a rights issue of 5.67 billion shares that was valued at Rp 120 a piece on Jan. 27.

The buyback led the bourse to lift the trading suspension on Arpeni on Feb. 6. The Indonesia Stock Exchange (IDX) imposed the suspension on Dec. 20, 2011, after the company defaulted on bond interest payments. The suspension put Arpeni at risk of being delisted.

After the buyback, Arpeni’s working capital loans decreased to Rp 328.8 billion from Rp 551.3 billion, derivative loans to Rp 311.9 billion from Rp 457.6 billion, while bonds, guaranteed debt and other debts fell to Rp 3.82 trillion from Rp 4.07 trillion. The total loans reach Rp 4.46 trillion, declining from Rp 5.08 trillion.

Arpeni finance director Andrew Hardi Hanubrata said the company would pay off mature debts amounting to $20 million this year.

“Debt payments are scheduled according to the composition plan created in the debt restructuring program,” Andrew said, adding that the company would use internal cash to pay off the debts.

The debt payments are expected to reduce the burden of interest the company has to bear.

After the restructuring program, the company’s interest rate reduced to 3.2 percent from 8.1 percent a year.

“The reduction in the amount of debts will ease the fluctuations faced by our business,” president director Oentoro Surya said, explaining that imbalance between supply and demand in dry bulk transportation, the company’s main business, in the last two years contributed to the company’s performance.

Oentoro said that Arpeni expected the dry bulk business to improve, supported by the country’s coal mining business.

Arpeni, which claims to own the largest fleet of Indonesian-flagged dry bulk vessels, is awaiting the delivery of two new vessels, each of which will have a capacity of 76,000 deadweight tonnage (DWT), from China.

Oentoro revealed that each vessel was worth $41 million. He said that Arpeni’s internal cash supported 20 percent of total funds of $182 million for the four vessels. The remaining 80 percent is supported by loans from UOB Bank Singapore branch and SEB bank.

“The loans’ tenure is 10 years with a total interest rate of 6 percent,” Oentoro said.

Given the additions to its fleet, Arpeni is expecting to book a 10 percent increase in revenue this year compared to last year.

“We estimate that last year’s revenue reached Rp 1 trillion,” Oentoro said.

The company reaped Rp 952.58 in revenue in the first nine months of 2011, declining by about 10 percent from Rp 1.05 trillion in the same period of 2011. The growing cost of services and financial services resulted in the company suffering a net loss of Rp 1.14 trillion from January–September 2011.