ABM Investama Secures US$300 Million from Global Bond Issuance

Photo by ABM Investama

JAKARTA (TheInsiderStories) – Publicly listed coal miner, PT ABM Investama Tbk (IDX: ABMM) secured US$300 million fresh funds from global bond issuances, said the company in the press statement. The appetite of global investors is quite high on the company;s bond worth of $1.1 billion.

Previously, the company own by AHK Holdings (Tiara Marga Trakindo Group) and US’s Eldorado Gold Inc., is set to issue global bonds up to $450 million over a five-year period. The bonds provide a coupon of 7.125 percent and valid from August 1, 2017 and matures on August 1, 2022.

Fitch Ratings has rated “BB-” with a stable outlook, then Moody’s rated Ba3 as well with a stable outlook. This is the first time the two rating agencies have evaluated ABM.

The proceeds of the bond issuance will be used to pay off banking loans and support the company in strengthening its coal business. ABM investama prepared up to $150 million to realize the acquisition of coal mine to increase coal production.

“The issuance of these Dollar bonds is part of ABM’s effort to improve the funding structure and gain access to additional coal reserves. With this strategy, we are optimistic that ABM’s performance and long-term will solidify,” said Finance Director of ABM Investama Adrian Erlangga at the shareholder meeting last July.

This year, ABMM targeting the capacity production up to 9 million tons of coal. Throughout 2016, the company,s total coal output reached 6 million tons of coal and will continue to increase to 14 million tons in 2019. ABM’s coal production will be marketed to China, India and meet domestic demand to supply steam power plants development.

ABM Investama President Director Andi Djajanegara explained, that in line with the recovery of coal prices in global markets, the company will increase its coal production capacity. To support this plan, ABM will tap sources of funding that are in line with the company’s strategy, thus, coal price recovery can have optimal impact on the company’s performance.

Adrian added, that coal prices have  the tendency to stabilize in the mid-term. Based on strong operational experience, ABM plans to add the company’s additional reserves by acquiring productive coal mines.

“The acquisition of the coal mines has become ABM’s priority to improve reserves and increase the company’s coal production,” he said.

According to

the International Energy Agency (IEA), growth in global coal demand will slow over the next five years due to lower consumption in China and the United States and as renewable energy sources gain ground. Even though China’s consumption is likely to have peaked, the country will still be the largest coal user over the next five years.

Globally, the IEA expects coal demand to total 5.636 billion tons of coal by 2021, compared to 5.400 billion tons of coal last year. This equates to 0.6 percent average annual growth from 2015 to 2021, below the 2.5 percent average yearly growth over the past decade.

Throughout 2016, ABM’s total coal production reached 6.4 million tons of coal which will continue to be increased up to 9 million tons of coal in 2017 and its expecting to be improved up to 14 million tons in 2019. ABM’s coal will be marketed to China, India and to meet domestic demand for coal-fired steam power plants which the government continues to build.

In 2016, ABM Investama posted a revenue of $590.7 million with an EBITDA of $166.0 million – up 23.1 percent compared to 2015. Within this period, the company successfully posted $12.6 million in net profit, an improvement from 2015 when ABMM recorded $38.1 million in net losses. Throughout 2016, the firm was also able to refinance its debts and curtail its obligations up to $110 million.

In line with ABM’s long-term strategy to balance its portfolio, the company will also reinforce its non-coal businesses such as the power sector and logistics services.

“The logistics sector will be one of ABM’s business development priorities in the future. The growing population and increasingly dynamic economic activities provide a highly lucrative opportunity for the logistics services in Indonesia,” said Adrian.

ABM Investama currently has two mining sites through PT Tunas Inti Abadi in South Kalimantan and PT Mifa Bersaudara and PT Bara Energi Lestari operating in Nangroe Aceh Darussalam.

(Written by Linda Silaen, Email: linda.silaen@theinsiderstories.com)