Medco Energi Plans to Raise $150 million from 5-Year Debt Sale

Jakarta Globe

Medco Energi Internasional, Indonesia’s only listed oil company, hopes to raise $150 million by selling five-year bonds at the end of the month, part of a plan to refinance maturing debt and finance expansion moves.

The company will offer the notes to investors on July 24-25, and it plans to list the notes on the Indonesia Stock Exchange on July 31, the company said in a brief prospectus published in Investor Daily on Wednesday.

The company will use 60 percent of the money from the bond offering, or $90 million, to refinance its maturing debt, the prospectus showed. The company set the coupon rate on the notes at 6.05 percent.

Many Indonesian companies are selling dollar and rupiah-denominated bonds after two international rating agencies — Fitch Ratings and Moody’s Investors Service — raised the country’s sovereign debt rating to investment grade earlier this year. A better debt rating helps companies raise funds at a cheaper cost.

Kawasan Industri Jababeka, an industrial estate company, is planning to sell $300 million in dollar-denominated bonds this year, the company said in brief prospectus earlier this week.

Medco has hired Bahana Securities to help arrange its debt sale, the prospectus showed.

Medco’s president director, Lukman Mahfoedz, said in May that the company’s debt sale was part of its big plan to raise $450 million this year.

The company, founded by Indonesian businessman Arifin Panigoro, has $534.5 million of debt due later this year.

Medco recently has aggressively sought to acquire oil and gas fields in the Middle East and North Africa as well as additional fields in Indonesia.

Net income at Medco rose to $12.1 million in the first quarter this year from $9.8 million in the same period last year, while its revenue rose to $282.2 million from $255.14 million.

Medco said its oil and gas production rose 3.9 percent to 66,100 barrels per day in the first quarter.

Lukman said last month that Medco’s planned acquisitions would help lift its production capacity to 120,000 bpd by 2015 from the 90,000 barrels it is set to produce without the acquisitions. Medco’s current production capacity is 80,000 bpd.