Semen Rembang Factory - Photo by Semen Indonesia

JAKARTA (TheInsiderStories) – State-owned cement producer, PT Semen Indonesia Tbk (IDX: SMGR) plans to issue bonds of Rp4.9 trillion from the total value of Rp8 trillion (US$563.38 million). The first phase of the bond was carried out in 2017 with a value of Rp3 trillion ($211.27 million).

Based on disclosure information from the Indonesia Stock Exchange (IDX) last week, the bonds were issued with a principal amount of Rp3.48 trillion which is fully guaranteed (full commitment).

Semen Indonesia management said that all the funds obtained would be used to pay off part of the company’s long-term debt credit. At present, the total of Semen Indonesia loans up to March 2019 is valued at $926.70 million or Rp13.07 trillion.

The bond issuance option is the best option chosen by the company as a funding source because it has a fix rate, thereby reducing the risk of interest rate fluctuations.

The bonds offer two series, namely series A with the amount of bonds amounting to Rp2.83 trillion, where the coupon issuance is 9.0 percent per year, and the five-year period with the maturity date of May 28, 2024.

Meanwhile, series B bonds amounted to Rp654 billion with coupons of 9.1 percent per year. The period of series B bonds is seven years which will mature on May 28, 2026.

The remainder of the principal amount offered by Rp1.41 trillion will be guaranteed the best effort. If the amount in the best guarantor is not sold in part or in full, then the remaining sold is not the obligation of Semen Indonesia to issue the bond.

Bond interest is paid quarterly, according to the bond interest payment date. The first payment will be made on August 28, 2019, while the final payment will be due on the due date of each series of bonds.

The this year’s plan to issue bonds is also the issuer’s option to refinance the company’s shares, where previously, Semen Indonesia purchased 6,179,612,820 shares or equivalent to 80.6 percent of the ownership in PT Holcim Indonesia Tbk (IDX: SMCB) worth $917 million.

In addition, the company spent Rp2.83 trillion in the tender offer of 1.35 billion shares at a price of Rp2,097 per share.

Moreover, seeing the company’s achievement in the first quarter (1Q) 2019 is unsatisfactory, the bond offering is an alternative to get funding.

Reportedly, the sales volume of Semen Indonesia in 1Q 2019 decreased slightly by 1.97 million tons, down 4.36 percent compared to March 2018 of 2.06 million tons.

While the export sales volume in March 2019 also decreased by 15 percent, where the company only achieved total exports of 245,344 tons, smaller than the March 2018 period of 288,845 tons.

In the current year (January-May), Semen Indonesia recorded cement sales volume of 5.97 million tons, down slightly by 0.03 percent compared to the previous year of 6.19 million tons.

Written by Daniel Deha, Email: