JAKARTA (TheInsiderStories) – Singapore-based Alam Synergy Pte. Ltd., unit of PT Alam Sutera Realty Tbk (IDX: ASRI), completed the issuance of global bonds totaling US$422.4 million, said the company on Tuesday. The notes has been listed in Singapore Stock Exchange on Nov. 3.
In details, the bond with worth $171.39 million offered with an interest rate of 6 percent and tenure four years. The remaining, amounting to $251 million maturing in 2025 with a coupon rate of 6.25 percent per annum.
The lead managers and book-runners for the bond issuance are JP Morgan Ltd., and UBS AG Singapore branch. All funds obtained from the bond issuance will be used by Alam Sutera to pay the remaining debts on 2021 and 2022, including interest and costs.
Despite being able to extended the global bond terms with the bondholder, Fitch Ratings has downgraded Alam Sutera’ rating to RD from C on Oct. 28, 2020. Fitch assesses that the completion of the exchange of old bonds with new ones is a restricted default measure taken Alam Sutera to avoid default.
Earlier this year, Moody’s Investor Service also downgraded Alam Sutera rating from B2 to B3. At the same time, the agency downgraded the unsecured senior ranking of the bonds issued by its subsidiary at the same level. The bonds, which will mature in 2021 and 2022, have been guaranteed by the builder and most of its subsidiaries. Outlook ratings at the top remain negative.
The downgraded reflects the agency expectations due to a reduction in the value of the developer‘ land sales to China Fortune Land Development Co. Ltd., (CFLD, Ba3 stable), and the risk of refinancing on bonds of $175 million in April 2021 and $370 million in April 2022.
In 2019, Alam Sutera recorded sales of around Rp2.2 trillion and land sales to CFLD of Rp930 billion, far from the company’s target of around Rp4 trillion. In 2020, Alam Sutera targets to achieve core marketing sales of around IDR 3.5 trillion and land sales to CFLD of IDR 500 billion.
Its estimates the company will generate around Rp800 billion in cash from operations over the next 12 – 18 months, which will not be enough to cover repayment of its debt in 2021. As a result, the developers are dependent on external funding to overcome it.
The company has obtained approval from bondholders to issue financing of up to $185 million on Jan. 28, 2020. At the same time, Alam Sutera is in discussions with banks to increase Rupiah loans.
Founded in November 1993 under the name of PT Adhihutama Manunggal by Harjanto Tirtohadiguno and their families, the company listed on the Indonesia Stock Exchange in December 2007. The firm is an integrated property developer in Indonesia that focuses on land sales in accordance with urban planning requirements, as well as property development in the residential and commercial segments in Indonesia.
The company changed its name to Alam Sutera on Sep. 19, 2007. Travel as a leading property development company in Indonesia began with the construction of the first project in an integrated area called Alam Sutera in 1994.
The company has an area of 800 hectares located in Serpong, Tangerang. Until now, the company has launched 37 residential clusters and 2 apartment buildings. As of Dec. 31, 2019, the King Ning family owned around 47 percent of the property company.
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