JAKARTA (TheInsiderStories) – PT Perusahaan Listrik Negara (PLN) announced today that it has commenced tender offers to purchase for cash any and all of the outstanding 2019, 2020, and 2037 Notes (together with the 2019 Notes and the 2020 Notes) as much as US$2.5 billion.
Holders of notes will receive in cash for validly tendered and accepted for purchase by the company, US$1,066.75 per U.S.$1,000 principal amount for the 2019 Notes, $1,074.00 per $1,000 principal amount for the 2020 Notes, and $1,295.00 per $1,000 principal amount for the 2037 Notes.
The tender offers will expire at 5:00 p.m., New York time, on May 4, 2018. The company expects the payment date to be May 9, 2018, or the third business day in New York following the expiration time.
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 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 CEP 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.
The Company has engaged Citigroup Global Markets Inc., The Hongkong and Shanghai Banking Corporation Limited, Mandiri Securities Pte. Ltd. and Standard Chartered Bank to serve as dealer managers for the Tender Offers.
Global MTN Program
Yesterday, Moody’s Investors Service, has assigned a provisional (P)Baa2 rating to the proposed $5 billion global medium term notes (GMTN) program of PLN.
At the same time, Moody’s has assigned a Baa2 senior unsecured rating to
the proposed notes issued under this MTN program, which will represent
the first drawdown under this program and will rank pari passu with all
other senior unsecured debt issued by PLN.
The drawdown will include a tranche of PLN’s inaugural Komodo bond — an Indonesian Rupiah denominated global bond settled in US$. The outlook on all ratings is stable.
Abhishek Tyagi, a Moody’s Vice President and Senior Analyst said, the rating also reflects PLN’s high financial leverage, which has been further elevated by its involvement in the national capacity additions programs – Fast Track program 1 and 2, and a 35GW five-year program.
“We expect these programs to increase PLN’s debt levels and put further pressure on its key credit metrics over the medium-to-long term until the programs are completed”, Tyagi adds.
The three-notch uplift in the rating reflects the strategic importance of
PLN, and in Moody’s expectation of a very high likelihood of government support in a distressed situation.
Such expectation of support considers the 100 percent government ownership in PLN, plus the strategically important role that PLN plays in Indonesia’s critical power sector. The government has over time provided performance guarantees in support of some of PLN’s debt.
Drawdowns under the GMTN program will be mainly used by PLN to partially
fund its capital expenditure requirements, refinancing of existing bonds and for general corporate purposes or as set forth in the Pricing Supplement applicable to the notes.
The stable outlook reflects the stable outlook on Indonesia’s sovereign
rating and PLN’s strategically important position as Indonesia’s only
vertically integrated electric utility, and its close linkage with the
PLN is the dominant operator of generation plants, and transmission and distribution networks. Its transmission network covered around 48,901 ckm power and its distribution network covered around 1,028,679 ckm power at the end of 2017.
PLN is also the country’s largest electricity producer, with a capacity of around 42.7GW, which accounted for 76.3% of the market at the end of 2017. It is the sole off-taker for Indonesia’s independent power producers.
Majapahit Holding B.V., the issuer of the 2019 Notes, 2020 Notes and 2037 Notes, was incorporated as a private company with limited liability under the laws of the Netherlands and has its corporate seat in Amsterdam, The Netherlands.