The Jakarta Post
Indonesian credit rating agency Pefindo changed on Tuesday the outlook on giant property developer Agung Podomoro Land (APLN) from stable to negative in response to the controversy over the company’s reclamation project in Jakarta.
APLN’s Pluit City project is under scrutiny from the Corruption Eradication Commission (KPK) and this process could end up postponing the project. Pefindo has not yet downgraded the company’s rating.
"We have not changed the rating yet but we changed the outlook to negative to anticipate the controversy surrounding the reclamation project," Pefindo analyst Yogie Perdana said.
Yogie asserted there were negative consequences from the assessment such as disturbances to cash flow, litigation with regional government and the blackening of the company's reputation.
The company has already secured Rp 1 trillion from pre-sales of Pluit City, but they have also spent Rp 1.7 trillion to pay contractors and obligations to the city administration, he said.
The Rp 1.7 trillion is divided into a Rp 700 billion payment to Dutch contractors Boskalis and Van Oord, and a Rp 1 trillion payment to the Jakarta administration.
"If the project is canceled, the company will need to pay back some money to customers, but we still do not know when and how," he said.
The company has relatively high leverage with a debt to equity ratio of 0.93, but the rest of the sales outlook remains positive because the company has a lot of recurring income.
Standing on 160 hectares of artificial land, Pluit City is designed to be a modern city off the north coast of Jakarta.
Pluit City will have landed houses, shop houses, condominiums, apartments, offices, retail shops, an entertainment lifestyle center and an 8-hectare park in the middle of the island. (dan)
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