PT Chandra Asri Petrochemical Tbk offered a third phase sustainable bond in 2020 with a total of Rp750 billion (US$53.57 million) - Photo by the Company.

JAKARTA (TheInsiderStories)PT Chandra Asri Petrochemical Tbk (IDX: TPIA), a chemical producer based in Indonesia, offered a third phase sustainable bond in 2020 with a total of Rp750 billion (US$53.57 million), the company said in disclosure information on Monday (01/27). The offering is part of the company’ sustainable bond II with a target fund of Rp2 trillion.

In 2018, the company has offered the first phase of bonds amounting to Rp500 billion, followed by the second phase worth Rp750 billion last year. The funds will be used for business expansion, the company said. The first phase funds have been fully absorbed, while the second phase has not been fully realized.

“The principal amount of the Rp750 billion loan will have a fixed interest of 8.7 percent per annum and has a term of five years from the issuance date. Bond interest will be paid every three months. The first payment will be made on May 12, 2020, and the last on February 12, 2025,” the company said.

The producer said the funds will be used to finance its business expansion. Weeks ago the manufacturer considered to release as much as 7.17 billion shares this year, but no further detail the target funds from the rights issue.

But with the current price Rp9,500 a share, the producer could reap Rp68 trillion. All the funds will be used to construct a new petrochemical complex owned by its unit, PT Chandra Asri Perkasa, in Cilegon, West Java. The new project is estimating need investments worth around Rp80 trillion. Besides, rights issue,  Chandra Asri also seeks a strategic investor to fund the project.

Last December, President Joko Widodo has inaugurated the new polyethylene plant owned by publicly listed companies in Cilegon. The producer spent $380 million to build the factory with total capacity production 400,000 tons per annum.

With the addition of the new plant, the capacity production of the company increases to 736 thousand tons a year. In the same location, the unit of PT Barito Pacific Timber Tbk (IDX: BRPT), now in the process to develop a second petrochemical complex.

The factory produces polyethylene which is a raw material for supporting infrastructure products and a number of other industries and is intended to meet the needs of the domestic industry.

Its president director, Erwin Ciputra said, the polyethylene factory is expected to be an import substitution and save the country’ foreign exchange amounting to Rp8 trillion. He adds, the new factory has also received a tax holiday policy from the government.

From 2005 to 2019, the company has also been realized investment of Rp 28 trillion with various capacity expansion activities, debottlenecking and construction of a new factory. Until the end of 2019, the composition of shareholders consisted of Barito Pacific 41.88 percent, Thailand’ SCG Chemicals Co. Ltd. 30.57 percent, Prajogo Pangestu 13.99 percent, Marigold Resources Pte. 4.75 percent, and public 8.81 percent.

US$1=Rp14,000

Written by Lexy Nantu, Email: lexy@theinsiderstories.com