JAKARTA (TheInsiderStories)—Indonesia’s state-owned power company PT Perusahaan Listrik Negara (Persero) issued mid-term bonds worth US$5 billion.
Linklaters acts as international counsel for PLN on its US$5 billion Global Medium Term Note Program establishment, US$2 billion inaugural drawdown, and concurrent cash tender offers.
Linklaters acted as international counsel for state-owned company PLN on the establishment of a new US$5 billion Global Medium Term Note Program. Shortly after its establishment, PLN issued two series of USD-denominated notes in a US$2 billion drawdown to international investors.
Proceeds from this issuance of the notes were used to repurchase for cash certain notes that PLN had previously issued in three concurrent tender offers.
This series of transactions was notable because it involved a close coordination of the new issuance of USD-denominated notes under the Global Medium Term Note Program to a wide range of international investors, including US investors pursuant to Rule 144A, and concurrent settlement of three tender offers through the facilities of the US DTC settlement system.
This Global Medium Term Note program is also notable because it gives the issuer the flexibility to issue notes with a wide range of terms, including Indonesian Rupiah-denominated, USD-settled bonds (“Komodo bonds”).
The establishment of the Global Medium-Term Note program included the following parties: Arrangers: Citigroup Global Markets Inc., The Hongkong and Shanghai Banking Corporation Limited, Standard Chartered Bank, Standard Chartered Bank (Singapore) Limited and Mandiri Securities Pte. Ltd.Dealers: Citigroup Global Markets Inc., The Hongkong and Shanghai Banking Corporation Limited, Standard Chartered Bank, Standard Chartered Bank (Singapore) Limited, Mandiri Securities Pte. Ltd., Australia and New Zealand Banking Group Limited, BNP Paribas.
The first drawdown of the Global Medium-Term Note program included the following managers: Citigroup Global Markets Inc., The Hongkong and Shanghai Banking Corporation Limited, Mandiri Securities Pte. Ltd., Standard Chartered Bank, PT Bahana Sekuritas, PT BNI Sekuritas, PT Danareksa Sekuritas.
Last year, PLN was heavily criticized for inefficiency and accumulating debts totaling $22 billion. These debts raised concerns on the part of Minister of Finance Sri Mulyani Indrawati about company debts and interest payable over the next 30 years exceeding the cash-raising capability of the state-owned enterprise.
Many stakeholders warned that over the long run PLN may suffer cash flow problems because of the mandatory 35,000 MW mega power plant. PLN will need around $10 billion at least for the construction of the 10,000 MW plants and for transmission.
Even so, the CEO Sofyan Basir claimed PLN’S debts were still manageable. Around Rp100 trillion of debt was owed to local creditors, $1.1 billion to the World Bank and Asian Development Bank and the remainder of around Rp186 billion to various foreign creditors.