PT Adaro Energy Tbk' (IDX: ADRO) unit to issue a global bond worth of US$750 million, the official said last week - Photo by the Company

JAKARTA (TheInsiderStories) – Indonesian coal miner, PT Adaro Energy Tbk‘ (IDX: ADRO) unit to issue a global bond worth of US$750 million, the official said last week. The bonds that will be listed on the Singapore Stock Exchange is offered with interest rate at 4.25 percent and have maturity in 2024.

According to the spokesman, Mahardika Putranto, the unit PT Adaro Indonesia, the bond get rating Ba1 from Moody’s Rating and BBB- from Fitch Ratings with stable outlook. The proceed from the issuance will be used to repay a portion of Adaro Indonesia’ existing debt and for capital expenditures, he adds.

He continued, Adaro Energy as guarantors for the bond issuance helped by DBS Bank Ltd., Citigroup Global Markets Singapore Ltd., Singapore branch UBS AG, MUFG Securities Asia (Singapore) Ltd,, and OCBC Ltd.

Currently, the miner hold 88.5 percent at Adaro Indonesia. The company‘ has thermal coal business with an annual production of around 50 million tons (MT) of coal, since 2013, making it the second largest coal producer by volume in Indonesia.

As reported, the company owned by PT Saratoga Investama Sedaya Tbk (IDX: SRTG), prepared capital expenditure up to $600 million for this year. This year, Adaro Energy targeting its coal production around 56 MT of coal and income before interest, tax, depreciation and amortization $1.2 billion.

Throughout 2018, the miner sold 54.39 MT of coal to Southeast Asia (40 percent), East Asia (30 percent), India (14 percent), China (11 percent), and the rest to other countries five percent . The company’ combined strip ratio for fourth quarter (4Q) 2018, reached 4.59 times, reaching 5.06 times for 2018. These results slightly exceeded the guidelines set at 4.9 times.

The miner also recorded an increase in coal production of four percent to 54.04 million tons. The production and sales contributed to the miner’ operating income which rose 11 percent from $3.26 billion to $3.62 billion.

However, the rising income did not help ADRO’ net profit, which fell 13.56 percent to $417.72 million from 2017 at $483.23 million. The reason is that the company’ main burden rose from the position of $2.12 billion to $2.41 billion.

Operating expenses also rose from $183.65 million to $194 million. Other expenses also increased from $6 million to $124.3 million. The increase in cost of revenue was due to an increase in stripping ratio, volume, price of fuel oil, and payment royalties to the Government of Indonesia as the average selling price increases.

Good weather conditions in third quarter of 2018 and high prices led to increased cover stripping activities at Adaro Energy‘ mines and resulted in an increase in stripping ratio. The company’ fuel consumption rose 15 percent, while fuel costs increased 40 percent due to increasing of operational activities and global fuel prices.

For management of fuel price fluctuations, the unit of Saratoga hedged around 20 percent of fuel needs in 2018 at prices lower than the budget.

US$1: Rp14,000

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