JAKARTA. PT Medco Energi Internasional Tbk continues to make surprises. After acquring PT Nemont Nusa Tenggara (NNT) for US$ 2.6 billion, the company is scheduled to announce another acquisition on Monday (16/9).
President Director of Medco Hilmi Panigoro said that Medco will not stop at NNT acquisition and is targeting for other acquisitions. However, Hilmi declined to reveal the names of targeted companies, as well as the values of the acquisitions. “Merger and acquisition are critical and about confidential”, Hilmi said.
Hilmi added that the acquisitions will increase the amount of cash flow to the company. Aside of cash flow, the acquisitions will improve Medco Energi’s business performance.
According to Hilmi, before acquiring Newmont, earnings before interest, taxes, depreciation, and amortization or EBITDA’s of Medco only amounted to US$250 million. However, after receiving credit and acquiring Newmont, Medco recorded US$ 700 million of EBITDA.
Hilmi admitted that Medco Energy expects for instant revenues from the acquisitions.
Based on Kontan’s record, one of Medco Energi’s business lines Medco Power is currently joining the bidding processes for the projects of PLTP (Geothermal Power Plant) Salak and PLTP Drajat, which are owned by PT. Chevron Pacific Indonesia. The tender processes are scheduled to complete by December 2016.
Hilmi refused to specifiy the funding resources for the acquisitions. But he claimed that Medco Energi has good reputation and never faces problem in obtaining loans. Until now, Medco Energi has US$ 2.3 billion of debt, including US$750 million from three banks for funding the acquisition of NNT.
Recently, debt to equity ratio of Medco Energy is above the normal level. However, according to Head of Research Department at NH Korindo Securities Reza Priambada, Medco Energi is good at managing cash flow so that the company is able to settle their debts. “If the company’s management is able to manage debts, the acquisitions will not have any risk”, Reza said.
Reza added that recently Medco Energi has released bonds with ‘A+’ rating from Pefindo. The rating indicates that Medco does not have significant issue with cash flow. (Translator: Muhammad Farid)
Editor: Sanny Cicilia