BNBR restructures Rp 5 trillion of debts

September 30, 2016, 11.29 AM  | Reporter: Emir Yanwardhana, Narita Indrastiti
BNBR restructures Rp 5 trillion of debts


JAKARTA. PT Bakrie & Brothers Tbk (BNBR) sets to cut its debt by Rp 4 trillion to Rp 5 trillion through debt restructuring. President Director of BNBR Bobby Gafur Umar expects that the restructuring process will accomplish within one year or two years.

Bobby said that BNBR needs leeway to launch business expansion to infrastructure sector. “We will have negotiation with creditors”, he said. Bobby added that BNBR will conduct the restructuring under the agreement with each of creditors.

Recently, BNBR has restructured its debt by issuing a worth of Rp 990.6 billion of mandatory convertible bonds. Subsequently, the bonds will be converted under the scheme of without pre-emptive right issues. BNBR plans to issue 19.8 billion units of series D common stock, or equal with 17.45% of shares of issued capital and paid up capital.

The mandatory convertible bonds’ price is Rp 50 per a share, with a five-year conversion time. By issuing mandatory convertible bonds, BNBR will settle its debts with five creditors, namely Daley Capital Limited, Inventures Capital Pte Ltd, Smart Treasure Limited, Harus Capital Limited, and Maybank Kim Eng Securities. Out of the five creditors, BNBR is mostly indebted to Daley Capital and Inventures Capital with Rp 430.3 billion and Rp 373.3 billion of outstanding debts, respectively.

BNBR will continue to restructure its debt until the company reaches acceptable debt ratio. “BNBR’s outstanding debt is Rp 12 trillion. We expect that BNBR’s debt may decrease to sustainable level at Rp 7 trillion”, said Independent Director of BNBR Dody Taufiq Wijaya.

Dody added that BNBR has to restructure Rp 2 trillion and Rp 4.2 trillion of outstanding debts from Mitsubishi Corporation and Glencore International AG, respectively.

As of June 2016, BNBR recorded Rp 12.3 trillion of liabilities and minus Rp 2.9 trillion of equities. In other words, BNBR experienced capital deficiency. However, Dody is confident that the debt restructuring may return the company’s equity into positive area.

In 2017, BNBR will focus on developing infrastructure business through the construction of Tanjung Jati A electric steam power plant (PLTU) that has 2x660 megawatt (MW) capacity, the construction of Cimanggis-Cibitung toll road, and the installment of Kalija pipes (phase I) projects.

Chief Strategic Business Development Officer of BNBR Indra Ginting mentioned that to date BNBR has not yet optimized its factories’ utilities. “The demand is low so that we are focus in increasing the factories’ capacities”, Indra said.

Analyst at First Asia Capital David Sutyanto said that the debt burdens have restricted BNBR business activity. It is expected that the restructuring will stimulate BNBR’s business expansion.

“Infrastructure project is still attractive. The company may have better prospect if the creditors agree on the restructuring”, David said. However, David has not yet recommended investors to buy BNBR shares, which are stuck at the price of Rp 50 for every share.

(Muhammad Farid/Translator)

 

 

 

 

Editor: Dupla Kartini

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