Bakrieland focuses on cutting down liabilities

JAKARTA. Property developer PT Bakrieland Development expects to complete restructuring its debt papers soon and cut down its liabilities for a better financial posture.

Bakrieland, whose shares are traded on the Indonesia Stock Exchange (IDX) under the code ELTY, is working on restructuring its US$155 million equity-linked bonds that were issued in March 2010 through its subsidiary BLD Investment Pte Ltd.

The bonds are supposed to mature in March 2015. However, on March 20 this year, bond holders with a combined $151 million took out a “put option” requiring the company to settle the debt papers sooner.

ELTY president director Ambono Janurianto said his company was currently in talks with bond holders to settle the debts.

According to Ambono, the bonds’ restructuring plan involves a maturity extension by three years to 2016, changing the debt papers status to “secured” (guaranteed) from “unsecured”, payment by installment and a likely increase in interest from currently 8.625 percent.

“Those should be workable. We hold meetings [with bondholders] every week. In the restructuring process we have to have a unanimous settlement,” Ambono said, adding there were more than 10 bond holders of the equity-linked bonds.

“We hope to settle the restructuring later this year,” he said.

The company, Ambono said, would now focus on property development rather than becoming an infrastructure player. ELTY had planned to expand into the infrastructure sector, particularly by taking part in developing toll roads under one of its subsidiaries, PT Bakrie Toll Road (BTR), but the company was late to realize that infrastructure development could not give a quick return, making the company burdened with debts as it supported its infrastructure projects.

Ambono said the company expected to cut its debt to Rp 3 trillion by the year end from Rp 6 trillion by the end of 2012. The restructuring of the equity-linked bonds and recent asset selling could contribute to the decline in liabilities.

According to Ambono, ELTY could have sold its assets to pay for the equity-linked bonds. However, he said, selling more assets would mean no more projects to be developed and sold to customers, which in turn would affect the company’s profitability.

“We don’t want to see more assets selling,” he said.

According to its 2012 financial report, ELTY’s subsidiary PT Bakrie Infrastructure agreed in October last year to sell its 93.65 percent stake in toll road developer BTR to PT Zulam Alinda Sejahtera for
Rp 140.5 billion.

Zulam made a cash payment amounting to Rp 90.55 billion and bought 89.13 million shares in Jakarta-listed PT Bhakti Investama, worth Rp 50 billion.

Also, ELTY agreed last December to sell a 50 percent stake in PT Lido Nirwana Parahyangan to Zulam.

In April 2013, ELTY’s subsidiary PT Graha Andrasentra Propertindo sold a 15 percent stake in PT Bukit Jonggol Asri to PT Sentul City for Rp 300 billion.

Also in April, ELTY’s unit PT Bakrie Nirwana Semesta and Sugilite Company Limited signed a deal to sell a stake in PT Bali Nirwana Resort to PT Pratama Prima Investama. (Raras Cahyafitri)