JAKARTA (TheInsiderStories) - Japanese firm, TOA Corporation, partnering with local company, PT Waskita Beton Precast Tbk (IDX: WSBP) to enter Indonesian market, the management announced today. Both parties has signed the deal on Feb. 9 and eyes new contract Rp7.88 trillion (US$562.86 million).
To carry out various construction projects, especially water, sewage, dredging, reclamation, ports and coastline building sectors, the two will form joint operation. According to M. Cholis Prihanto, president director of the issuer, 21 percent are existing projects and 79 percent from external.
Recently, the subsidiary of the state-owned construction company, PT Waskita Karya Tbk (IDX: WSKT), postponed the payment of bond interest according to the specified time. The bonds were issued in 2019 with a principal amount of Rp1.5 trillion with a fixed coupon of 9.75 percent and will mature on Oct. 30, 2022.
PT Pemeringkat Efek Indonesia downgraded the holding company rating from “idA-” to “idBBB +” due to financial problems. The negative outlook is also to anticipate the increased risk of refinancing amid a worsening credit environment. Fitch Ratings also lowered the precast concrete producer long-term rating to ‘CCC-(idn) from earlier BB (idn) with outlook negative.
The rating agency also placed the company on Rating Watch Negative (RWN). At the same time, The downgrade followed the similar rating of the parent on weakening liquidity and higher refinancing risk. The CCC ratings denote a very high level of default risk relative to other issuers or obligations in the same country.
Fitch wrote, “We assess legal and operating ties to be moderate due to senior management overlap and influence over Waskita Beton‘ investments, strategy and operations.”
The agency also stated, the company’ liquidity has been deteriorating on the back of slower project completion and challenging cash collection from project owners. These will ultimately result in depressed cash flow from operations for the issuer as payment terms from customers are prolonged despite project completion.
Waskita Beton produced precast, ready mix, quarry, construction services and post tension precast concrete with a production capacity of 3.7 million tones per year. A number of large projects have been completed using the manufacturer products are the Benoa - Bali Toll Road, Gempol - Pasuruan Toll Road, Gempol - Porong Toll Road, and Pejagan - Pemalang Toll Road.
Then, Palembang LRT project, Becakayu Toll Road, Terminal 3 of Soekarno - Hatta Airport, Adam Malik Busway Special Line, Palembang Underpass, Cimanggis Cibitung Toll, Cibitung Cilincing Toll Road, and Krian Legundi Bunder Manyar Toll Road. The constructor has listed its share on Sept. 20, 2016 by releasing 10.54 billion shares with price of Rp490 a unit.
From the sale shares, Waskita Beton obtained fresh funds of Rp5.16 trillion, helped by PT Mandiri Sekuritas, PT Danareksa Sekuritas, PT Bahana Securities, and PT BNI Securities. While, TOA founded in 1908 that focuses on various construction projects, such as dredging and reclamation, design and implementation of coastline buildings, airport construction, marine recreational facilities, warehouses, distribution, factories and power plants.
US$1: Rp14,000
Written by Editorial Staff, Email: theinsiderstories@gmail.com
