Jababeka to Pay Debt With $350m Bond Sale Next Year

Industrial property developer Kawasan Industri Jababeka is set to sell $350 million in bonds next year, in an attempt to pay debts and finance the company’s business expansion.

Jababeka corporate secretary Mulyadi Suganda said on Thursday at its annual general shareholders meeting, in which the company’s bond issuance plan to pay back its $175 million five-year bonds due in 2017 was approved.

Mulyadi said current bonds bear 11.75 percent in annual coupon. The company is aiming for a 7.81 percent to 8.55 percent coupon on new seven-year bonds, referring to coupon for a similar type of bonds that were sold during March and May this year.

“The bonds issuance is to reduce the interest burden,” Mulyadi said after the shareholders’ meeting in Jakarta.

“Company will still wait and see if market conditions improve. This is not something that is urgent,” he said, adding that the company will issue the seven-year bonds in the next 12-month period.

Jababeka appointed Standard Chartered Bank and UBS to arrange dollar-denominated bonds.

“The remainder of the bond issuance would be used for land development,” Mulyadi said.

Jababeka started acquiring land for expansion of its independent city in Jababeka industrial park, in Cikarang, West Java. The company has set aside Rp 500 billion ($5 million) for the land acquisition.

“Funds for acquisition are from our internal cash. We seek to expand Jababeka to its surrounding area,” Mulyadi said. In the first half, the company recorded marketing sales – sales made before erecting any buildings – of Rp 626 billion on about 20 hectares of land. That accounts for more half of the company’s total target of Rp 1.2 trillion on up to 50 hectares area for this year.

Jababeka is an industrial estate operator with estates – home to shoe manufacturers and automotive companies – in Bekasi, West Java, and in Tangerang, Banten.

Jababeka’s net income rose to Rp 527.3 billion last year from Rp 380 billion in 2011. Revenue increased to Rp 1.9 trillion last year from Rp 1.4 trillion in 2011, according to company data.

Shares of the company rose 1.5 percent to Rp 315 on the Indonesia Stock Exchange on Friday, compared with a 0.6 percent rise for the main stock gauge.

Jababeka was established in 1989. It is the first publicly listed industrial estate developer in Indonesia.

Source: Jababeka Globe