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Jakarta Post

Pupuk Indonesia to issue Rp 3.7t bonds to repay loan, aid expansion

Read all about it: PT Pupuk Indonesia holding company human resource and general director Djafarudin Lexy S

The Jakarta Post
Jakarta
Wed, June 18, 2014

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Pupuk Indonesia to issue Rp 3.7t bonds to repay loan, aid expansion Read all about it: PT Pupuk Indonesia holding company human resource and general director Djafarudin Lexy S. (left), commissioner Megananda Daryono (second from left), finance director Achmad Fadhiel, technology and manufacturing director Indra Jaya (second from right) and investment and development director Nugraha Budi Eka I. (right) prepare documents that will be used in a public expose after conducting a shareholders meeting on Tuesday. (JP/Jerry Adiguna) (left), commissioner Megananda Daryono (second from left), finance director Achmad Fadhiel, technology and manufacturing director Indra Jaya (second from right) and investment and development director Nugraha Budi Eka I. (right) prepare documents that will be used in a public expose after conducting a shareholders meeting on Tuesday. (JP/Jerry Adiguna)

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span class="inline inline-none">Read all about it: PT Pupuk Indonesia holding company human resource and general director Djafarudin Lexy S. (left), commissioner Megananda Daryono (second from left), finance director Achmad Fadhiel, technology and manufacturing director Indra Jaya (second from right) and investment and development director Nugraha Budi Eka I. (right) prepare documents that will be used in a public expose after conducting a shareholders meeting on Tuesday. (JP/Jerry Adiguna)

State-owned fertilizer producer PT Pupuk Indonesia will issue Rp 3.7 trillion (US$313.04 million) worth of bonds in order to help finance loan repayment as well as the company'€™s business ventures including developing new entities in new sectors, the company announced on Tuesday.

The bonds, which have garnered an AAA rating by global ratings agency Fitch Ratings, will be offered in two types. The Series A will have a three-year maturity period with a yield of between 9.25 percent and 10 percent. The Series B will mature in five years with 9.75 percent to 10.25 percent yield.

Pupuk Indonesia will offer the bonds between July 2 and 3, with a planned listing on the Indonesian Stock Exchange (IDX) on July 10. The underwriters for the bond issuance are BCA Sekuritas, HSBC Sekuritas, Mandiri Sekuritas and Danareksa Sekuritas.

Pupuk Indonesia subsidiaries include Pupuk Iskandar Muda (PIK), Pupuk Kalimantan Timur (Pupuk Kaltim), Pupuk Sriwidjaya (Pusri) and logistics firm Pupuk Indonesia Logistik.

'€œAround 41 percent of the funds will be used to pay off bank loans for PIK, 32 percent will be used to develop Pupuk Kaltim'€™s business and production, 8 percent will be used to develop our logistics sector through Pupuk Indonesia Logistik, while the rest will fund entities formed by the company in the energy, property and industry sectors,'€ said Pupuk Indonesia'€™s financial director Achmad Fadhiel.

The company has planned to spend Rp 5 trillion during the next five years to complete its ongoing projects, including the construction of several factories, the $500 million to $650 million Kaltim 5 urea fertilizer production plant in East Kalimantan, the $690 million Pusri IIB urea plant in Palembang and a new phosphoric acid plant in Gresik, East Java, which is a joint venture with Jordanian firm Jordan Phosphate Mines Co. with an expected total production capacity of 200,000 tons a year.

'€œHopefully, all production plants will be completed and operational by the end of this year,'€ Achmad added.

The company'€™s investment and development director, Nugraha Budi Eka Irianto, elaborated that the primary focus would be the Pusri IIB plant construction, which is crucial for expanding the company'€™s production. It will have a 907,500-ton production capacity.

With the addition of the new plants, the company aims to increase its production capacity to 500 million tons of urea fertilizer by the end of 2015.

Pupuk Indonesia also plans to expand into the energy sector with the funds raised from the bond issue, by building two coal-fired power plants in Lhokseumawe, Aceh and Cilangkap, East Jakarta, worth a total of Rp 240 billion, beginning this year.

Aside from production, the company also aims to heighten exports, particularly targeting the United States and India this year.

Pupuk Indonesia is already an active exporter to other Southeast Asian nations, including Vietnam, the Philippines, Thailand and Cambodia.

The company is expecting a 10 to 12 percent growth in revenue this year and a 4.5 percent increase in net profit from Rp 3.7 billion last year, according to Achmad. (dyl)

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