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Jakarta Post

Waskita mulls bond issue, sells toll roads to boost liquidity

  • Mardika Parama

    The Jakarta Post

Jakarta   /   Wed, October 28, 2020   /   03:39 pm
Waskita mulls bond issue, sells toll roads to boost liquidity Heavy equipment is used at the Bekasi-Cawang-Kampung Melayu overpass toll road construction site in Bekasi, West Java, on April 24. (JP/PJ Leo)

State-owned construction company Waskita Karya (Waskita) is considering when to issue bonds worth Rp 2 trillion (US$136.6 million), as well as divesting its ownership of toll roads, as the company aims to strengthen its liquidity amid the COVID-19 crisis.

Waskita finance director Taufik Hendra Kusuma claimed on Tuesday that several investors had shown an interest in the bonds. The company is also currently undergoing the issuance process with a rating agency.

However, the construction firm is still waiting for the right time to issue the bonds given the current volatile market situation, he said.

“We found that there is an adequate appetite for our bonds based on discussions with several investor candidates. However, we’re still taking a ‘wait-and-see’ approach for the right market and economic conditions,” he said during a virtual press conference.

In the meantime, the company will rely on the divestment of its ownership of several toll roads to boost its equity, Taufik said.

The company currently owns 16 toll roads in Java and Sumatra, with a total length of 833 kilometers and combined investment value of Rp 155 trillion.

Waskita aims to divest five of its toll roads by the end of the year, including those in Greater Jakarta and the trans-Java network, according to Waskita president director Destiawan Soewardjono.

On Aug. 31, Waskita, through its subsidiary Waskita Toll Road, signed an agreement to divest its 30 percent stake in the 21-km Bekasi-Cawang-Kampung Melayu toll road, worth an estimated Rp 550 billion. The company divested its shares through a limited participation mutual funds (RDPT) instrument.

In total, the toll road divestment is expected to reduce the company’s debt by an estimated Rp 19 trillion to Rp 20 trillion, according to the company’s statement.

“We planned to sell five toll roads this year, but we may be unable to achieve that because of the pandemic. Next year, we’ll propose divestments for toll roads that are 100 percent completed,” he said.

Read also: Waskita secures BBB+ rating for bonds, expects Rp 35t project revenue in 2020

Waskita has seen its liquidity deplete significantly this year, falling to Rp 1.37 trillion as of June this year, from Rp 9.25 trillion in December last year. As of June, its total liabilities stood at Rp 89.1 trillion, a 4.7 percent dip from the end of last year.

The company has also recently paid off Rp 2.52 trillion in maturing bonds due in October.

Further, Waskita is awaiting incoming funds of around Rp 13 trillion, sourced from payments for its projects, as well as a government repayment for land acquisition, the company’s statement reads.

Going further, Destiawan said the company was planning to also shift its projects portfolio by increasing the number of conventional projects with private companies and the government, with shorter terms for break-even point (BEP), instead of investment projects such as toll roads.

“We will switch our main revenue line from our subsidiaries, which mainly deal with investment projects such as toll roads, to conventional infrastructure projects from state-owned enterprises [SOEs], the government and the private sector,” he said.

Waskita had recorded new contracts worth Rp 12.2 trillion by the end of the third quarter, less than half of its Rp 27 trillion target for 2020, and 19.2 percent lower year-on-year than the Rp 15.1 trillion it booked in the same period last year.

Waskita posted revenues of Rp 11.7 trillion between January and September, almost half of last year’s Rp 22.01 trillion revenue during the same period, according to the company’s presentation on Tuesday.

Waskita’s shares, listed on the Indonesia Stock Exchange (IDX) as WSKT, fell 1.99 percent on Wednesday at 1.30 p.m. to Rp 740 apiece, against the benchmark Jakarta Composite Index’s (JCI) fall of 0.31 percent.