JAKARTA (TheInsidersStories) – PT Alam Sutera Realty Tbk (IDX: ASRI) plans to release senior bonds with worth US$485 million, said the developer company today (07/20). The funds from the bond issuance will be used to pay off the company’ debts which will mature next year and 2022.
The bond has a tenor of three years and will be issued by its subsidiary, Alam Synergy Pte. Ltd., domiciled in Singapore. The coupon of the bond will be determined later and will be announced after the shareholders’ meeting on August 26.
All funds obtained from the issuance will be used to pay off the remaining debts of 2021 and 2022 including interest and costs to be paid along with relevant redemption prices that have not been paid off. Based on Alam Sutera‘ financial report in 2019, the developer’ net profit grew 4.22 percent to Rp1.01 trillion ($70.63 million).
Earlier this year, Moody’s Investor Service had downgraded the company rating from B2 to B3. At the same time, the agency downgraded the unsecured senior ranking of the bonds issued by its subsidiary, Alam Synergy 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 downgrade to B3 reflects Moody’s expectations due to a reduction in the value of the Alam Sutera‘ 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.
“The outlook remains negative because all corporate debt denominated in US dollars will mature in 2021 and 2022. The company is dependent on external funding, but there is no commitment of funds to address the risk of refinancing,” said Jacintha Poh, the analyst from Moody’s.
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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