Bakrie wants to sell toll road unit by year end

JAKARTA. Bakrie Group-controlled property developer PT Bakrieland Development (ELTY) says it expects to sell off its toll road unit by year end to ease the strain on its finances.

Bakrieland, the developer of Rasuna Epicentrum in South Jakarta and Nirwana Residences in several cities, wanted to sell its PT Bakrie Toll Road subsidiary for at least Rp 1.3 trillion (US$137.8 million), an amount equal to the subsidiary’s equity, to settle debts, Bakrieland’s new president director Ambono Janurianto said last week.

PT Bakrie Toll Road, which developed the 35-kilometer Kanci-Pejagan toll road between Cirebon, West Java, and Brebes, Central Java, has a Rp 1.8 trillion debt. If the subsidiary’s obligations were repaid, Bakrieland’s finances would significantly improve, Ambono said.

The Kanci-Pejagan toll road has been criticized by Public Works Minister Djoko Kirmanto for poor roads that have led drivers to shift to alternate routes.

Kontan weekly quoted Ambono as saying that the sale should be completed by year end. “The divestment of Bakrie Toll Road must be done this year, either in the third or fourth quarter, so that it no longer burdens the company.”

The plans of Bakrieland, which has a market value of about Rp 2.5 trillion, to sell the subsidiary have been on the books since 2010, awaiting a better appraisal from investors.

Bakrieland wanted to sell Bakrie Toll Road for more than Rp 1.3 trillion, but investors want the price to be lower, Ambono said.

He said that there was one investor in Asia that had completed due diligence and started to explore the possibility of buying the subsidiary.

Bakrie Toll Road, which is owned by Bakrieland through another subsidiary, PT Bakrieland Infrastructure, had Rp 3.48 trillion in assets as of June, according to Bakrieland’s financial report.

Universal Broker Indonesia’s head of research, Satrio Utomo, said the desire to sell Bakrie Toll Road might be prompted by narrow profit margins in the toll road business or to settle mounting debts.

Bakrieland’s net revenues from the toll road business dropped almost 20 percent in the first half of this year to Rp 36.58 billion from Rp 45.69 billion in the same period last year.

Its net losses also plunged by more than 20 percent to Rp 32.74 billion in the January-to-June period, down from Rp 27.21 billion in during the first six months of last year.

“It seems that the asset sale is only an effort to pay loans, like any other Bakrie Group corporate action,” Satrio said.

Bakrie Group wants to sell its units to secure money to repay the mounting debts of the group and its subsidiaries, including for PT Bakrie Sumatera Plantations (UNSP) and PT Bakrie Telecom (BTEL).

Bakrie Toll Road has secured a Rp 1.36 trillion syndicated loan facility from Bank Negara Indonesia (BNI); Bank Rakyat Indonesia (BRI); and the regional development banks of West Java and Banten (Bank BJB), East Java (Bank Jatim) and Central Java (Bank Jateng). The loan commitments were obtained in 2008 with duration of nine-and-a-half years.

The company also obtained term loan facility agreement in 2009 from Beleggingsmaatschappij Broem B.V. with a principal amount of $45 million for 3 years with interest rate of 15.875 percent per year.

Shares in Bakrieland traded at Rp 58 apiece on Friday, down 1.69 percent from the previous day.

The stock has slumped 51.26 percent so far this year, while the broader stock index has gained 7.25 percent. (Esther Samboh/ The Jakarta Post)