The Jakarta Post
Processed food producer PT Mayora Indah ( MYOR ) is set to launch Rp 750 billion ( US$82 million ) in debt paper to develop factories as it seeks to grow sales by 20 percent this year.
Rp 500 billion of the total planned issuances will be raised from conventional bonds, while the remaining Rp 250 billion would come from Islamic debt papers ( sukuk ), the company announced Monday.
Mayora offered between an 8.25 and 9.5 percent coupon rate for its seven-year conventional bonds, while the five-year Islamic bonds ( sukuk ) carry 7.75 to 9 percent returns — with payment of returns every three months, according to Mayora’s presentation materials.
Local Indonesian rating agency PT Pemeringkat Efek Indonesia ( Pefindo ) gave a rating of AA- for both bonds and sukuk. PT Danareksa Sekuritas and PT Mandiri Sekuritas have been appointed as underwriters for the issuances, while Bank CIMB Niaga was the trustee.
Mayora expected to start offering the bonds on May 3 and 4 after the book building process from Monday to April 23. The bonds and sukuk will be allotted on May 7 and listed on the Indonesia Stock Exchange ( IDX ) on May 9.
“Proceeds from the [conventional] bond issuance will be used to develop a biscuit factory, fund routine expenses and develop a cocoa bean processing factory,” Mayora director David Atmadja told reporters following the announcement.
Proceeds from sukuk issuance will be used to procure raw materials, wrapping accessories and spare parts to support Mayora’s business, he added.
Mayora currently has six factories in Tangerang and one factory in Bekasi, which would need capital expenditure ( capex ) of Rp 500 billion this year to improve their production capacity, David said.
“But it will take 12 to 18 months before the investment [translates into more production capacity],” he added.
Mayora expected that its expansion plans would help the company book a 20 percent increase in sales after posting a 30 percent jump in sales to Rp 9.45 trillion last year,
According to David, that should lift net profit to between Rp 625 and Rp 650 billion, increasing by 33 to 38 percent from last year’s Rp 471 billion net profit, which was a 2 percent decline from 2010.
“Last year, we suffered from prices of raw materials increasing by about 19 to 50 percent. However, we saw that the prices started to go down in the fourth quarter,” David said, adding that the 19 to 25 percent decline in raw material prices will help Mayora’s performance this year.
Still, Mayora would raise prices of its products this year after the company refrained from raising prices last year despite pressures from soaring commodities prices.
“We will perform price adjustments of 5 to 10 percent in May. The price increase is also subject to adjustment to higher inflation,” David said, dismissing speculation that the increase was aimed to anticipate a possible subsidized fuel-price hike.