Bakrie’s Energi Mega Set to Sell $500m in Bonds to Repay Debt
Oil and gas company Energi Mega Persada plans to sell as much as $500 million in dollar-denominated bonds next year to help repay its maturing debt.
The Jakarta based company plans to refinance $450 million in debt, Herwin Hidayat, the company’s chief of investor relations, said on Tuesday.
Herwin said the company’s shareholders agreed in June for the company to sell up to $600 million in bonds.
However given the euro zone’s lingering unfavorable market, the company decided to cut the size of its agreed sale.
Company officials visited Hong Kong, Singapore and several European financial centers in recent months to gauge investor demand. Herwin said that investors “were positive” about the company’s debt plan.
He added that the company owed $450 million in debt to a group of creditors arranged by Credit Suisse Group several years ago.
The company will pay back the $200 million in principal debts to EMP Holdings Singapore to the Singapore branch of the Credit Suisse, with interest.
Herwin noted that the company aimed to increase its revenue by 71 percent to $600 million next year from an estimated $350 million this year.
The rise in revenue will be supported by a rise in gas and oil production.
Energi Mega has yet to announce its financial results for the first nine months of this year.
However, it announced a 20 percent decline in net income to $1.2 million in the first six months of this year from $1.5 million from the same period a year earlier.
Revenue rose 144 percent to $241 million from $98.9 million from the same period last year.
Profit at the company fell during this period due to rising costs, the company said in August.
Energi Mega holds a 36.7 percent stake in the Offshore North West Java Block. Pertamina and Singapore’s Risco Energy hold the other stakes in the block.
Similar to many other Indonesian companies, Energi Mega is following the trend of selling debt next year to finance expansion plans.
Bank Rakyat Indonesia, the country’s second largest lender by market share, plans to sell dollar-denominated bonds in the first half of next year to help meet its lending growth target.
Bank Mandiri, the country’s largest lender by assets, plans to sell between $500 million and $800 million in bonds next year. The Jakarta-based lender was created by the merger of four state banks more than a decade ago.
Energi Mega is controlled by Indonesian corporate conglomerate the Bakrie Group, chaired by veteran businessman and presidential aspirant Aburizal Bakrie.
The Bakrie Group is looking to significantly reduce its debt next year, including by selling off assets. In the year to the end of September, the company decreased its debt by 34 percent to $652 million.
Earlier this week the company flagged a plan to sell off between 40 and 80 percent of Bakrie Pipe Industries.
Energi Mega shares rose 5.5 percent to Rp 77 a share on the Indonesia Stock Exchange on Wednesday, outperforming the 0.4 percent gain on the main stock gauge.