JAKARTA (TheInsiderStories) – PT Waskita Beton Precast Tbk (IDX: WSBP), a subsidiary of the state-owned construction company, PT Waskita Karya Tbk (IDX: WSKT), postponed the payment of bond interest according to the specified time. Necessarily, the payment of interest should be made today.
Referring to the Indonesian Central Securities Depository data, the bonds were issued in 2019 with a principal amount of Rp1.5 trillion (US$103.45 million) with a fixed coupon of 9.75 percent. These bonds are listed on the Indonesia Stock Exchange on Oct. 31, and will mature on Oct. 30, 2022.
Recently, Waskita Beton has been in the spotlight in the last few days after the arrest of the President Director of the company, Jarot Subana. He was named as one of the suspects in a fictitious subcontractor case in projects that took place in Waskita Karya, by the Corruption Eradication Commission.
The agency has arrested five suspects in corruption cases involving fictitious sub-contractor work in projects that took place in Waskita Karya on Thursday (07/23). It is estimated that the state lost Rp186 billion through this fictitious project.
Recently, PT Indonesian Rating Agency (PEFINDO) downgraded the company’ holding company bond, Waskita, which was issued in 2015, 2016 and 2017 from “idA-” to “idBBB +” due to financial problems to pay off its obligations.
“With no longer commensurate with idA-rank, and our hope that its financial leverage will continue to increase because Waskita will continue to rely on external funds for working capital to carry out contract and investment deposits,” the report said.
Prospects for Waskita ratings are set to “negative” to anticipate further weakening in the credit profile due to the challenging operating environment and economic downturn caused by COVID-19, especially if the pandemic continues, which can lead to increased restrictions also due to operations and supply chain disruptions. , including delays in tendering new projects.
In the first quarter (Q1) of 2020, the builder’ new contracts reached Rp3.2 trillion, down 24 percent compared to last year (YoY), thus depleting the contract savings to Rp52.5 trillion as of March 31, 2020. This caused a construction revenue ratio of 2.3x on a YoY basis, down from an average of 3.6x in 2015 – 2019.
The negative outlook is also to anticipate the increased risk of refinancing amid a worsening credit environment. Waskita has bonds worth Rp2.5 trillion, which will mature in October 2020, which are expected to be refinanced using internal cash. In Q1 2020, the company had a cash balance of Rp6.1 trillion.
The state firm is one of the largest construction companies in the country. Its main business, providing construction work, contributed 91 percent of revenue in 2019. Other businesses include precast concrete, toll roads, property and energy.
The contractor has an extensive domestic marketing network with 33 marketing offices throughout the country. The Indonesian government holds a 66 percent stake in Waskita as of March 31, 2020, with the remainder publicly owned.
Meanwhile, the unit is engaged in the manufacturing industry of precast and ready mix concrete. The Company is working on various projects in the fields of toll roads, bridges, high-rise buildings and river revitalization. The company has conducted listed its share on Sept. 20, 2016 by releasing 10.54 billion shares at a price of Rp490 a unit.
From the listing of these shares, Waskita Beton obtained fresh funds of Rp5.16 trillion, with underwriters including PT Mandiri Sekuritas, PT Danareksa Sekuritas, PT Bahana Securities, and PT BNI Securities.
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