PT Indah Kiat Pulp & Paper Tbk (IDX: INKP) will issue medium-term notes (MTN) worth Rp2.17 trillion (US$155 million) - Photo by the Company.

JAKARTA (TheInsiderStories) – Indonesian multinational company that manufactures paper, PT Indah Kiat Pulp & Paper Tbk (IDX: INKP) will issue medium-term notes (MTN) worth Rp2.17 trillion (US$155 million), the company wrote in disclosure information on Indonesia Stock Exchange on Wednesday (12/11).

Sinarmas Group including PT Bank Sinarmas Tbk (IDX: BSIM), PT Sinarmas Asset Management and PT Asuransi Simas Jiwa will buy almost all MTN issued by the company, it said. Asuransi Simas Jiwa will buy Rp1.877 trillion, Sinarmas Asset Management Rp1 billion and Bank Sinarmas Rp7 billion. The three parties bought a total of Rp1.88 trillion.

Indah Kiat offers an interest rate of 10.25 percent per year for MTN which will mature in December 2022 or have three year’s tenor. PT Sinarma Sekuritas which is also an affiliated company acts as an arranger. While PT Bank Negara Indonesia Tbk (IDX: BBNI) as a monitoring agent in the issuance of MTN.

The affiliate transaction has received a fairness assessment from KJPP Toto Suharto and Partners. Indah Kiat revealed the MTN issuance was carried out as alternative funding that required a shorter time compared to the loan process from the bank.

“The purpose of MTN issuance is to refinancing the company’s debt payments and MTN issuance is done without special collateral,” the company said.

Last month, the company planned a buyback of a total of Rp4.30 trillion in five MTN series issued in 2017-2018. The company offers buyback on Nov. 8 – 22 and the repurchase date held on Dec. 9.

The company prepared funds of Rp1 trillion to repurchase of MTN has been issued in 2017 with a maximum price of 100 percent of the price of par. For the notes released in 2018, the producer will spend as much as Rp3.30 trillion for a maximum price of 100 percent of the price of par.

Indah Kiat revealed has not obliged to buy all MTNs offered by MTN holders if the repurchase offer from MTN holders exceeds the maximum amount of funds. No further details, how the unit of Asia Pulp & Paper to refinance the notes.

Early this year, Asia Pulp & Paper (APP) has invested $3.5 billion to build a paper mill in the Andra Prakasam, India. This investment has become the largest foreign direct investment in India in recent years.

Through this MoU, APP will set up a greenfield in the land on 1,000 hectares and paper manufacturing with a total of five million tons pulp, paper, and board. The factory will have a capacity of five million per year.

US$1=Rp14,000

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