JAKARTA (TheInsiderStories) – Fertilizer producer, PT Pupuk Indonesia plans to issue local bond as much as Rp2.5 trillion (US$174.83 million) in this year. The proceeds will be used to pay off some of the company’ debts and provide loans to its subsidiaries.
The bonds are part of the company’ Sustainable Public Offering with a total targets of Rp8 trillion. The bonds consist of three series, namely Series A with three years tenure, Series B maturing in five years, and Series C for seven years.
It was said, Pupuk Indonesia need funds to pay off part of its sustainable bonds which will mature on Nov. 9, 2020. In addition, the holding company plans to allocate loans to two subsidiary entities, PT Petrokimia Gresik and PT Pupuk Iskandar Muda.
The company has appointed underwriters to handle these bonds, namely PT Bahana Sekuritas, PT BCA Sekuritas, PT BNI Sekuritas, PT Danareksa Sekuritas, and PT Mandiri Sekuritas. Fitch Ratings Indonesia gives an AAA rating which indicates an investment grade rating for this bond.
The initial bond offering period will take place on July 15-29, 2020. Then, the public offering will be on August 13, 2020 and the estimated listing on the Indonesia Stock Exchange on August 24, 2020.
Recently the Indonesian government has reduced the price of industrial gas through Ministerial Regulation Number 8 of 2020 to US$6 per MMBTu. According to the company’ CEO, Aas Asikin Idat, the decline in gas prices has a positive impact on the industrial sector, including the fertilizer industry.
The policy provides a significant efficiency benefit to production costs, which in turn reduces the burden of government subsidies for fertilizer commodities.
“It is estimated, within a year the savings could reach Rp1.4 trillion if calculated based on the current tonnage of fertilizer subsidies which reached 7.9 million tons. The impact is quite significant because the gas cost component has a portion reaching 70 percent in the production cost structure,” he said on July 6.
Referring to the company’ data, the producer began with the establishment of PT Pupuk Sriwidjaja which was established on December 24, 1959. In 1998, Pupuk Sriwidjaja became a holding company that oversees five subsidiaries namely PT Pupuk Kalimantan Timur, Petrokimia Gresik, PT Pupuk Kujang, Pupuk Iskandar Muda, and PT Mega Eltra.
Then, the company changed its name to Pupuk Indonesia on April 3, 2012 and on December 23, 2013 established a subsidiary called PT Pupuk Indonesia Logistik.
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