JAKARTA (TheInsiderStories) – Indonesian property developer, PT Agung Podomoro Land Tbk (IDX: APLN) plans to pay off bonds with a total value of Rp550 billion (US$39.07 million), said the management on Wednesday (09/11). The company will hold a general meeting of bondholders to get approval on Sept. 25 and 26.
If the bondholders agree to on the planned the company will pay 100 percent of the bond. Then, adding the current interest payable until the due date of payment. Lastly, the company will also give the interest bond until the due date, minus the current interest due.
Recently, Moody’s Investors Service downgraded the corporate family rating of Agung Podomoro to B2 from B1. At the same time, the rater also downgraded the backed senior unsecured rating of the 2024 notes issued by APL Realty Holdings Pte. Ltd., a wholly owned subsidiary of the property developer firm to B2 from B1.
The notes are guaranteed by the company and some of its subsidiaries. The outlook on all ratings was changed to ratings under review for downgrade from negative.
Jacintha Poh, a Moody’s VP and senior credit officer said the downgrade reflects Agung Podomoro‘ weak financial management and the expectation that the company’s operating performance is unlikely to improve in 2019. The company’ credit metrics will therefore likely remain weaker than the thresholds set for a B1 ratings level.
The developer obtained a term loan facility in May 2019 to address
the maturity of its outstanding Rp1.3 trillion bonds over the next 12 months. The company has used part of the loan facility to refinance its Rp750 billion bond that matured on June 6, 2019.
However, Moody’s understands that the availability of funds to refinance the remaining Rp550 billion bonds is now uncertain. The APLN’ refinancing risk is exacerbated by the maturity of its Rp1.3 trillion syndicated loan facility. Agung Podomoro is unable, at this point, to share concrete refinancing plans.
The company is unlikely to achieve around Rp3 trillion of core marketing sales in 2019 and 2020 and conclude the Rp2.5 trillion of industrial land sale at its Podomoro Industrial Park in Karawang, Greater Jakarta.
Agung Podomoro plans to sell one of its investment properties in the second half of 2019, and use part of the proceeds to reduce debt. However, the sale is subject to delays and will not support a sustained improvement in the company’s credit metrics.
Moody’s review will focus on the company’ ability to provide a clear and concrete refinancing plan for upcoming maturities over the next 12-18 months. The lack of such a plan could lead Moody’s to further downgrade the ratings over the next one to two months.
Currently, the relocation of the capital city to North Penajam Passer and Kutai Kertanegara in East Kalimantan, announced by President Joko Widodo in August, give an opportunities for Agung Podomoro, which has pioneered the development of the Borneo Bay City in Balikpapan since 2013, said the director Agung Wirajaya.
The developer has built on a total land area of around 10 hectares of which about 5 hectares of Borneo Bay City with the concept as a Superblock.
“At present, our focus is to continue to develop Borneo Bay City so that it can become an integrated area to sustain the new capital city in East Kalimantan,” concluded by Wirajaya.
Agung Podomoro is an integrated property developer. It listed on the Indonesia Stock Exchange in 2010. The company and its subsidiaries are engaged in the development, management and operation of apartments, houses, shopping centers, office towers and hotel properties. Its controlled by Trihatma Kusuma Haliman, with an around 80 percent stake in the company at end of March, 2019.
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