Garuda $500 Million IPO Kicks Off Busy Year in Indonesia

Jakarta Globe, Denny Thomas & Vikram Subhedar | January 04, 2011

Hong Kong. Flag carrier PT Garuda Indonesia launched an up to $500 million initial public offering (IPO) on Tuesday, kicking off a busy year for capital-raising in Southeast Asia's biggest economy.

A Garuda Indonesia airplane undergoes maintenance work in the
Garuda Maintenance Facility at Soekarno-Hatta International
Airport in Cengkareng, Indonesia. The flag carrier launches an up
to $500 million initial public offering (IPO) on Tuesday. (Bloomberg
Photo)

Indonesia's fast-growing economy is attracting interest from foreign investors, encouraging companies to tap equity markets.

Indonesia's benchmark share index .JKSE jumped 46 percent last year, in-part supported by $2.18 billion in foreign portfolio inflows, which was more than double the level in 2009.

Banks are also raising fresh capital to support an expected pick up in lending growth. PT Bank Mandiri Indonesia Tbk BMRI.JK, the nation's biggest lender, was raising up to $1.6 billion to support credit growth, according to a term sheet seen by Reuters.

The Indonesian government had initially planned to launch the Garuda IPO in November last year, but later delayed it for 2011.

The company aimed to list on Feb. 11, the term sheet said.

"IPOs of this size and nature will be a key feature of the industrialisation process driving ASEAN growth," said Singapore-based Geoff Howie, a sales and markets strategist at MF Global, referring to the Association of Southeast Asian Nations grouping.

"As the economic modernisation of Indonesia, Malaysia and Thailand continues, their new and existing financial assets will continue to provide investable economics," he added.

Citigroup Inc C.N and UBS AG UBSN.VX are the international book runners for Garuda's offer.

Reuters

Pertamina takeover plan confirmed

Nani Afrida, The Jakarta Post, Jakarta | Fri, 10/08/2010 10:00 AM

The government confirmed Thursday that Pertamina planned to acquire a majority stake in PT Medco Energi Internasional although the state oil and gas company has not issued an official statement on the plan.

State-Owned Enterprises Minister Mustafa Abubakar said that the state oil and gas company would take over the stake currently held by PT Encore Energy — a company owned by prominent Indonesian conglomerate Arifin Panigoro — through Pertamina subsidiary PT Pertamina Hulu Energy (PHE).

“The acquisition is now under negotiation,” he told reporters .

The minister said that the acquisition was part of PHE’s expansion program to further strengthen its oil and gas exploration and production operations.

Although Pertamina has not yet publicly announced the acquisition, Mustafa said that the state oil and gas company had reported the plan to his office and he expected negotiations would be completed before the end of the year.

Medco Energi was the first Indonesian company to operate in the oil and gas sector and has been listed on Jakarta Stock Exchange since 1994.

It has transformed itself from locally-focused company to an energy company operating throughout Indonesia and overseas, as well, with focus on oil and gas, power generation and renewable fuels.

According to the company’s 2009 financial report, Arifin’s Encore, which owns a 42.41 percent stake, is the single majority shareholder.

The public holds a 40.8 percent stake and is the second largest shareholder.

According to Bisnis Indonesia daily, Pertamina would acquire 46.41 percent stake in Medco.

Over the last three months, the firms have negotiated several cooperation agreements governing joint operations and mergers and acquisitions.

The takeover might cost Pertamina Rp 6.5 trillion (US$728 million), according to estimates.

On the acquisition, Medco Energi Internasional project director Lukman Mahfoedz declined to comment, saying that the company had not determined yet how great stake would be acquired by PHE.

“The decision will be in the hands of our company’s shareholders. I can’t comment,” he said as quoted by Bisnis Indonesia.

Pertamina corporate communications vice president Mochammad Harun said that the companies had not yet reached any agreement on the acquisition, nor on the percentage of shares to be acquired.

“When we have finished or closed the deal, we will inform the public,” he said as quoted by Republika online news portal.

Mochammad said that there were still processes that had to be completed before the company could acquire the stake officially.

He added that the company was conducting currently a study to determine which of Medco’s physical facilities could be synergized with Pertamina.

“We don’t have any deadline, because if we’re too hurried, the process can’t be optimized,” he said.

Earlier reports said that PHE postponed its initial public offering (IPO) plan this year due to the acquisition.

Medco Energi booked total revenues of $397.09 million in the first half of 2010, up 27.67 percent from $311.03 million in the same period last year.

Net profits rose 26.2 percent to $12.1 million in the first half, up from $9.6 million in the same period last year.

Revenues from oil and gas sales contributed $258.55 million to the total revenue from January to June while contracts and services provided $56.79 million, electricity and related businesses such as petroleum products contributed $30.24 million and $51.51 million, respectively. (rdf)

Garuda Plans IPO This Year

The Wall Street Journal, by P.R. VENKAT

Garuda plans to increase its fleet size to 116 from 67 currently over the next five years. The company will take delivery of 24 aircraft this year.

SINGAPORE -- PT Garuda Indonesia Wednesday said it plans to go public by mid-2010 and aims to raise US$300 million through a listing in Indonesia.

Garuda Chief Executive Emirsyah Satar said in a statement that airline is close to completing its debt restructuring.

The move to clean up the national carrier's balance sheet is aimed at giving its public offering a better chance at success following several previous failed attempts by the Indonesian government to offload its stake. Garuda said earlier this month that it has reached an agreement with investors to restructure notes that were due in 2007.

The proceeds from the initial public offering will be used to fund Garuda's "long-term growth plans," Mr. Satar said.

"We have yet to determine the underwriters [for the IPO]. The IPO will either be in late second quarter or early third quarter of this year," he added.

Garuda plans to increase its fleet size to 116 from 67 currently over the next five years. The company will take delivery of 24 aircraft this year.

The fleet size will be based mainly on Boeing 737-800s and Airbus A330-300/20s, which are operated on medium- and long-haul routes.

Mr. Satar said that Garuda has converted the 10 Boeing 787 jets it ordered two years ago into Boeing 777-300E aircraft as the Indonesian carrier wasn't willing to wait out the delays in the production of the 787 plane.

"The airline will introduce the 10 Boeing 777 on new ultra long-range flights starting 2011 as it expands its international network," he said.

Garuda also said it plans to add 10 domestic routes this year and start a daily non-stop service to Amsterdam June 1.

Besides, Amsterdam, the airline is also looking to fly other European destinations such as Frankfurt, Paris, London and Rome.

"This [new international series of routes] will be launched over the next few years," he said.

Mr. Satar said that Garuda is also planning to create a separate low-cost carrier by the end of this year to meet the growing demand of domestic and short-duration travel.

"We are in the process to get regulatory approvals to establish the entity," Mr. Satar said, adding that the low-cost carrier will operate a fleet of about 20 aircraft.

Garuda currently has a low-cost carrier subsidiary called Citilink.

PP expects to raise Rp 581b from public offering

Nani Afrida, The Jakarta Post, Jakarta | Sun, 01/31/2010 6:41 PM

State construction company PT Pembangunan Perumahan (PP) has targeted to raise Rp 581 billion (US$63 million) from its initial public offering (IPO) of shares slated for early February.

Mandiri Sekurities, one of the IPO underwriters, said PP would sell 21 percent of its shares to the public, at Rp 560 each.

Mandiri Sekuritas director and head of investment banking Iman Rachman said investors had shown strong interest in the offer.

“Investors, including two foreign investors, Fidelity and Pheim Asset [Management], have expressed a strong interest in PP shares,” Iman said, adding that several domestic investment firms including PT Jamsostek had also made commitments.

Besides Mandiri Sekuritas, PP has also appointed Danareksa Sekuritas and DBS Vickers Sekurities Indonesia as underwriters.

Earlier PP had said the company would use the public money to finance its investment plan, including for projects in property, construction and the energy sectors.

Established in 1953, PP gained Rp 3.9 trillion in revenue last year.

Garuda to go public in first quarter

Antara News, Saturday, January 9, 2010 21:23 WIB

Banda Aceh (ANTARA News) - State Enterprises Minister Mustafa Abubakar said here on Saturday PT Garuda Indonesia would go public in the first quarter this year.

"Let us pray it will be warmly welcomed by investors so that the target of shares to be sold will be met," he said at the launching of an environment program held by the state-owned airline company in cooperation with International Leuser Foundation (YLI) in Aceh.

He said PT Garuda would sell 25 percent of its shares to the public to raise Rp2.5 trillion to strengthen its capital.

Mustafa expressed his appreciation to the company that had been able to achieve a four-star ranking or one grade lower for the company to get the world`s highest ranking.

"We hope PT Garuda which is under the supervision of the office of the state enterprise minister will be able to achieve the five-star status so that the public listing program will be smooth," he said at the event which was also attended by Garuda president director Emirsyah Satar and Aceh governor Irwandi Yusuf.

PT Garuda Indonesia is optimistic the initial public offering could be realized in the first semester this year.

"Right now preparations are already being done including selecting the underwriters," he said.Emirsyah meanwhile said the IPO plan was part of the company`s restructuring program to improve its performance.

The proceeds from the IPO are expected to reach US$300 million and will be used to finance additional fleets, refurbishment as well as improving services," he said.

He said the result of the IPO would be dependable upon market conditions. "We will adapt it to the domestic capital market conditions," he said.

Emirsyah said until 2014 the number of the company`s fleets would be increased to 116 units from currently 67 units. The increase in the number of fleets will be followed by a hike in routes to serve and flight frequencies to reach 3,000 flights per week from currently around 1,700 flights.

Only three state firms to go public in 2010

Nani Afrida, The Jakarta Post, Jakarta | Tue, 12/15/2009 8:10 PM

State Enterprises Minister Mustafa Abubakar confirmed Tueday that only three state companies — construction company PT Pembangunan Perumahan, flag carrier PT Garuda Indonesia and steel maker PT Krakatau Steel — qualified for privatization through an initial public offering (IPO) in 2010.

PT Pembangunan Indonesia would be privatized in the first semester of 2010, while Garuda Indonesia and Krakarau Steel in the second semester, Mustafa said.

“Garuda will go public in the middle of 2010, probably in June, while Krakatau Steel will follow in the second semester,” he said.

He said the government would also watch the condition of the steel market, particularly after the ASEAN-China Free Trade Agreement (FTA) takes effect on Jan. 1, 2010, before deciding on when Krakatau Steel could go public.

Mustafa acknowledged that the FTA would influence domestic steel prices, as steel imported from China would be cheaper than Krakatau's.

“We have to see how the FTA progresses, and then we can talk about the Krakatau IPO,” he said.

Mustafa also confirmed that the government would delay the privatization of state plantation firms PT Perkebunan Nusantara (PTPN) III, PTPN IV and PTPN VII. The privatization of these companies through IPOs was previously slated for next year.

“These companies still need support from the government,” he said.

Related Article:

Garuda FRN buyback flops as IPO looms

Strong Demand in Indonesia For 2009’s Biggest IPO

The Jakarta Globe

The country’s biggest initial public offering this year, by state-owned PT Bank Tabungan Negara, has been massively oversubscribed, State Owned Enterprises Minister Mustafa Abubakar said on Friday.

BTN, the country’s largest home loan creditor, is offering 2.36 billion shares to the public, amounting to 27 percent of its equity. The share price has been set within a range of Rp 750 to Rp 1,100 (8 cents to 11 cents) per share, meaning BTN will raise between Rp 1.8 trillion and Rp 2.6 trillion.

The IPO attracted Rp 3.5 trillion of subscriptions, Mustafa said.

“BTN’s offer has been well received by potential investors during the road show,” he said.

BTN will offer the shares to investors on the primary market on Thursday and Friday, followed by a listing on the Indonesia Stock Exchange (IDX) on Dec. 17.

The state-owned bank has allocated 60 percent of the stock offered to local companies, with international buyers allocated the remaining 40 percent.

Several large investors have already committed to purchase sizeable stakes, Mustafa said.

“PT Jamsostek [a state-owned social security provider] is one of the biggest buyers of the BTN stock. We welcomed Jamsostek’s move because it will be positively accepted by local investors,” he said.

Jamsostek manages funds worth about Rp 78 trillion.

“The Government of Singapore Investment Corporation is one of the potential large international buyers,” Mustafa said.

The Singaporean government’s global investment management company manages around $100 billion. It invests in equities, fixed income, natural resources, treasury and currencies, real estate, and infrastructure.

BTN’s IPO has been delayed for several years as it waited for approval from the House of Representatives, which it received last year.

The bank said in a statement that all of the proceeds from the IPO would be used to support lending expansion in the coming years.

“This year we expect credit growth of 25 percent, while next year we hope it will grow by 20 percent,” said Iqbal Latanro, president director of BTN.

Pertamina to prepare for IPO

Antara News, Tuesday, November 24, 2009 14:36 WIB

PT Pertamina. (ANTARA/Ardika)Jakarta (ANTARA News/Asia Pulse) - Indonesian state-run oil and gas company PT Pertamina said it may list some of its units on the Indonesian Stock Exchange next year ahead of plans to launch its own initial public offering (IPO).

Pertamina may sell shares in insurance unit PT Tugu Pratama Indonesia, drilling unit PT Pertamina Drilling Services, geothermal unit PT Pertamina Geothermal Energy and energy exploration unit PT Pertamina Hulu Energi, chief financial officer Frederick Siahaan said.

Siahaan said the company would try to list subsidiaries first to increase transparency, adding that Pertamina would retain majority stakes.

BTN aims for Rp 2.6t from IPO

Nani Afrida , The Jakarta Post, Jakarta | Thu, 11/19/2009 9:38 PM

State-owned bank PT Bank Tabungan Negara (BTN) officially announced Thursday a plan to sell 27 percent of its stakes through its initial public offering (IPO).

BTN treasury director Saut Pardede said the bank expected to raise substantial fresh capital, which it would use to expand its business.

“The range is about Rp 1.8 trillion to Rp 2.6 trillion depending on the share prices,” he said.

Mandiri Sekuritas and CIMB Sekuritas will be underwriting the IPO.

Mandiri Sekuritas’ director of investment banking, Iman Rahman, said shares would be offered at between Rp 750 and Rp 1,100.

“We plan to register our first initial public offering at the Indonesia Stock Exchange (IDX) on Dec. 17. The book building starts today and ends Dec. 3,” Iman said, adding that BTN would also offer stakes to foreign investors.

“We will have investor road shows in Asia and Europe,” Iman said.

Garuda to spend $100m on expansion, new aircraft

Nani Afrida, The Jakarta Post, Jakarta | Tue, 11/10/2009 12:38 PM

Garuda Indonesia will spend US$100 million next year as part of its five-year expansion plan, which aims to increase the national flag carrier's fleet from 67 to 116 aircraft by 2014, to serve 27 million passengers.

"We plan to spend $100 million in capital expenditure in 2010 to buy more planes as well as to fulfill Garuda's other operational expenditure," Garuda finance director Eddy Purwanto told reporters on Monday.

He said Garuda still requires yet more capital to improve its infrastructure to provide its passengers with wider and better services.

If it manages to achieve this expenditure target , then it will be the third time the airline spent has $100 million in capital expenditure or more in one year,. It also spent over $100 million on capital expenditure in 2008.

The 2009 capital expenditure (so far) used in part to purchase new Airbus aircraft from Toulouse in south western France and from Boeing in Seattle in the United States.

Next year's proposed spending will be part of the airline's ambitious five-year expansion program to make it not only the largest airline in the country, but also one that can compete with its regional rivals.

On Monday, Garuda received one new Airbus 330-200 and one new Boeing 737-800.

Garuda has ordered 10 new Boeing 777-300ERs and 50 Boeing 737-800s. Previously, the company has received three Airbus 330-200s and one Boeing 737-800.

"Until today, we have about 67 aircraft. So, by 2014 we will be targeting to have at least 116 aircraft," Garuda president director Emirsyah Satar said, adding that the expansion program called for the modernization and revitalization of the Garuda aircraft fleet.

With this larger fleet, Garuda will be able to strengthen and expand it regional presence, flying more routes and with greater flight frequency.

"We will increase our routes and our increase the number of flights from 1,700 times per week in 2009 to 3,000 times per week in 2014," Emisyah said.

He said that the company was targeting to serve 27 million passengers by 2014, up from 10.1 million passengers recorded in 2008.

Emirsyah is confident the company would be able to achieve its operational targets and make Rp 3.75 trillion ($397.5 million) in profits by 2014.

In 2008, the airline booked Rp 669 billion in profits, out of total revenue of Rp 19.4 trillion.

For this year, Garuda has set a minimum 10 percent growth target for net profits compared to a year earlier. In the first half of this year, net profits stood at Rp 612 billion.

The company is now preparing to sell 40 percent of its stake though an initial public offering (IPO) next year (in 2010), in a process Garuda expects to bring in $300 million to $400 million in proceeds.

"Our target is still on these figures," he said.

The planned IPO is part of a debt restructuring agreement between the company and its creditor Bank Mandiri to settle a previously unpaid debt of about $100 million.

Indonesia's Garuda says plans to raise up to $400 mln in IPO

Reuters, Wed Aug 26, 2009 7:32am EDT

JAKARTA, Aug 26 (Reuters) - Indonesia's flag carrier PT Garuda Indonesia plans to raise up to $400 million in an initial public offering in June next year to fund its expansion, a senior executive said on Wednesday.

President Director Emirsyah Satar told Reuters that the firm plans to hold the IPO in June 2010, but details of the offering, such as the percentage of shares that are going to be privatised and the underwriter, are still being discussed.

"The target is to raise $300 million to $400 million, which will be used to strengthen our capital structure as well as for expansion," said Satar.

Indonesia's airline industry has been hit by several serious accidents in recent years, prompting the European Union to ban all Indonesian airlines from entering its airspace.

Garuda was one of four Indonesian airlines to be taken off the list of banned airlines recently, following safety improvements, and it now hopes to start flights to Amsterdam.

Analysts said the IPO would probably be well-received as Garuda may benefit from rising demand for domestic air travel.

"Garuda's IPO will really support the firm's financial condition as the funds raised from the IPO can be used to pay (down) its debt, decreasing the burden and making it possible to buy new planes for expansion," said Norico Gaman, head of research in brokerage firm PT BNI Securities.

Garuda is in the process of restructuring its debts, which it expects to complete in two months.

Gaman also said the IPO would encourage good corporate governance and efficiency, enabling the airline to compete in Indonesia's crowded airline market.

Transportation ministry data shows there are 15 scheduled commercial airlines in Indonesia, some of which also serve international routes. In September 2008, an Indonesian parliamentary commission approved the government's plan to privatise several state firms including Garuda, but the global financial crisis meant share sales were postponed. (Reporting by Tyagita Silka; Editing by Sara Webb)

State plantation company to spend Rp 300 billion on expansion drive

The Jakarta Post, Jakarta | Fri, 04/10/2009 1:39 PM

State-owned plantation company PTPN VII will spend Rp 300 billion (around US$26 million) in capital expenditure this year in support of an expansion drive.

"We've actually set aside total capital of around Rp 500 billion from our internal cash as well as from state banks, but we will only use Rp 300 billion for this year," president director Andi Punoko told reporters on Wednesday.

He said the funds would be used to revitalize a sugar plantation along with the replanting of around 30,000 hectares of rubber plantations and 40,000 hectares of palm oil plantations.

The Bandar Lampung-based company had announced that it would expand its plantation areas by 10,000 hectares for rubber, 8,500 hectares for palm oil and 6,800 hectares for sugar cane.

The move was part of the company's effort to boost production capacity in its sugar refineries in Cintamanis, South Sumatra, to 7,000 tons per year from the existing 4,000 tons and in Bungamayang, Lampung, up to 10,000 tons from the previous 5,500 tons.

With the expansion plan set to continue beyond this year, Andi said the company had also secured supporting long-term loan commitments of up to Rp 600 billion from two state banks, Bank Mandiri and Bank Rakyat Indonesia (BRI).

"Long-term loans with relatively loose requirements from banks are good leverage to fund our activities or expansion plans. This is also an alternative just in case our planned initial public offering (IPO) failed," he said.

The company plans to sell a 30 percent stake to raise up to another Rp 1.5 trillion through an IPO later on this year.

"We will wait for the market to get better before going public, meanwhile we will use the time to replant and revitalize our plantations" he said.

In addition to market volatility, other factors hindering the implementation of the proposed IPO, included various formal and legal aspects, internal preparations, and the current condition of the plantations, according to Andi.

PTPN at present has 62,713 hectares of palm oil plantations, 55,617 hectares of rubber, 18,780 hectares of sugar cane and 1,580 hectares of tea in Lampung and Palembang, South Sumatra. (fmb)

GarudaFood plans to boost sales by 30%, but delays IPO

Ika Krismantari, The Jakarta Post, Jakarta | Wed, 02/25/2009 1:52 PM  

Food producer, PT GarudaFood, is seeking to increase its sales by 20 percent this year as demand for food and beverages is expected to remain robust despite the global financial crisis. 

Managing director Hartono Atmadja said Tuesday that he was upbeat about the company' prospects, saying sales are targeted to hit Rp 3.65 trillion (US$306.6 million), from Rp 3.04 trillion last year. 

"The growth will be supported by *the sales from* biscuits and beverage products," Hartono said. 

Sharing his optimism, the company forecasts that the country's food industry will grow by up to 15 percent this year, as the demand for food will never stop. 

"We have not even incorporated the *additional* revenue the industry would get from the decline in imported products," Hartono said. 

The government has introduced limitations on the imports of unnecessary products earlier this year by cutting down the number of seaports and airports eligible as the entry point for certain products, with the aim of controlling smuggling products as well as the protecting of domestic markets. 

Under the policy, five categories of goods, namely garments, footwear, toys, electronics, food and beverages can only enter the country through five designated ports and some international airports. 

The Indonesian Food and Beverage Association (Gapmmi) has said that local industry would benefit from the import limitation policy and this could boost local sales by up to 15 percent. 

On the company's plan to go public, Hartono said the company has decided to delay the plan until the first semester of 2010, to wait for a better market environment. 

Garuda had planned to offer a 15 per cent stake to the public in the third semester of last year through an initial public offering (IPO). 

Garuda financial director Samuel Triswandi said the company would still expect to secure Rp 1 trillion from the IPO. 

Last year, Garuda booked a 23 percent rise in revenue up to Rp 3.04 trillion, whilst pushing up its net profits by 74 percent. 

The company however, refused to mention the value of its net profits. 

Data from the Central Statistic Agency (BPS) show that as of the third quarter in 2008, the food industry grew by 10.4 percent from the same period a year earlier. 

Garuda is a subsidiary of Tudung Group, a holding owned by businessman Sudhamek AWS. 

Tudung Group was established three years ago after Sudhamek decided to expand its business to other business sectors, including palm oil.

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UNILEVER INDONESIA OPTIMISTIC ITS SALES WILL HOLD UP

Govt offering green shoe stake in BNI to investors

Jakarta,  (ANTARA News) - The Ministry of State Enterprises (BUMN) is offering to investors a 4.14 percent stake or about 477.89 million green shoe shares in Bank BNI in an effort to meet its need for privatization funds to be paid to the government. 

"If there is a strategic investor who is interested in it, it can acquire 4.14 percent of BNI`s green shoe stake," BUMN Minister Sofyan Djalil said here on Friday. 

He said that his office was seeking a strategic partner because the conditions of the stock exchange were not supportive while BUMN had the obligation to contribute Rp1 trillion to the 2009 state budget. 

The minister said that uncertain conditions in the stock exchange had caused a number of BUMNs to face problems in carrying out their plans to issue initial public offering (IPO) this year. 

"We prefer the option on how to sell green shoe shares to strategic investors through a private placement system," the minister said. 

He said that the green shoe stake was additional share offering by underwriters issued when they conducted a public offering. It had the aim to reduce share price volatility after registration in the stock exchange. 

In July 2007, Bank BNI called for a secondary public offering with a right issue of 1.99 billion shares, of which the government sales reached 1.50 billion shares, including 473.89 million green shoe shares. 

The government is willing to sell its green shoe shares at BNI with a price similar to that during the secondary offering, namely Rp2,050 per share. 

"It should be sold at that price. It may not less than it. If there is a strategic investor, we will sell it," the minister said. 

Sofyan Djalil did not mention a deadline when the green shoe shares had to be sold. 

"In principle, it is open to any party and it is not bound to a deadline because it already gained approval from the privatization committee," he said.

Bakrie mulls IPOs for subsidiaries to repay debts

Ika Krismantari, THE JAKARTA POST, JAKARTA | Wed, 01/28/2009 11:19 AM  

Embattled PT Bakrie & Brothers, an investment holding of the politically wired Bakrie family, is planning to sell units via initial public offerings (IPOs) to repay debts. 

The company will take these measures should its plan to sell Rp 4.26 trillion (US$384 million) worth of convertible bonds to Northstar Pacific Partners fail to get approval  from shareholders and regulators, according to Bakrie & Brothers director Ari S. Hudaya on Tuesday. 

Bakrie & Brothers is due to have a meeting of shareholders to get the go-ahead in April or May.

“The Bapepam-LK (Capital Market and Financial Institution Supervisory Agency) and the shareholders must approve the issue. There’s a possibility we won’t get the go-ahead. If this happens, the restructuring will take more time,” he said. 

“But we have prepared several options (to settle the debts), including from dividend flow (of Bakrie subsidiaries), an expectation of higher prices on our stocks and IPOs for our non-publicly listed companies.” 

While refusing to name the companies ready for the IPOs, Ari merely hinted that the units would include those in the infrastructure and construction sectors. 

Bakrie & Brothers non-publicly listed units include among others PT Bakrie Pipe Industry, PT South East Asia Pipe Industries, PT Seamless Pipe Indonesia Jaya, PT Bakrie Construction, PT Bakrie Corrugated Metal Industry, PT Bakrie Building Industries and PT Bakrie Tosanjaya. 

Bakrie & Brothers will issue the Rp 4.26 trillion bonds to Northstar as a standby buyer that will be convertible into as many as 42.6 billion shares, equal to a 31 percent stake in Bakrie & Brothers, at a price of Rp 100 to Rp 110 a share. 

The deal with Northstar, a local arm of US buyout company Texas Pacific Group, is to help Bakrie & Brothers restructure debts and retain control of its main bread and butter earner PT Bumi Resources -- Asia’s largest thermal coal exporter. 

The bonds, scheduled for issue in May and to be converted into shares by the end of the year, will then replace a Rp 4.26 trillion loan the company owes to Northstar. 

Northstar helped Bakrie to settle $575 million of debt to Odickson Finance, a subsidiary closed to Gunawan Yusuf’s Sugar Group Companies, last December linked to a deal  whereby Bakrie should issue  bonds. 

Bakrie & Brothers minority shareholders are concerned their stake may be diluted due to these steps. 

Ari, however, said the company would stick to its initial plan to sell convertible bonds as this move was thought to be more beneficial to shareholders than the sale of assets. 

Bakrie & Brothers is scheduled to submit the bond proposal to Bapepam-LK in February at the latest. 

“Amid the current market conditions, I doubt whether it’s a good time for the bond issue. But Northstar is ready to be the standby buyer,” said Ari. 

In response to the recent controversy over Bumi’s purchases of coal producers PT Pendopo Energi and PT Fajar Bumi Sakti, and mining service firm PT Dharma Henwa for a combined Rp 6.1 trillion, Ari insisted that these purchases must proceed despite the current investigations by Bapepam. 

Ari, who is also Bumi’s president director, dismissed allegations that these acquisitions might be bogged down by conflicts of interest and concern over possibly overvalued selling prices. 

Bapepam chairman Fuad Rahmany said Tuesday the regulator was investigating the deals to see whether they were substantial enough to require Bapepam approval. 

Bumi’s purchases will be financed by 70 percent loans and 30 percent from equity, according to Ari.

Katarina Utama to go public soon

The Jakarta Post | Fri, 01/23/2009 12:47 PM  

JAKARTA: Telecommunications equipment service provider PT Katarina Utama is planning to go public this year, president director Fazli Zainal Abidin said in Jakarta Thursday. 

“We plan to sell 40 percent of our shares to the public in the first quarter of this year,” he said, adding the amount is subject to change due to stock market fluctuations. 

According to Mukti Wibowo, the vice president of investment bank Optima Karya Capital Securities, which is arranging Katarina’s initial public offering (IPO). 

The management did not disclose so far the revenue target for the IPO. “In total, the company will sell around 400 million shares,” he added. 

Fazli explained the company would use the IPO proceeds to expand its business, which builds telecommunication towers for several telecommunications service operators, including Excelcomindo and Indosat. 

Katarina’s projects are mostly using  products of Swedish telecommunication giant Ericsson.

Ministry to cancel more IPOs of state companies

The Jakarta Post, Jakarta | Tue, 01/20/2009 2:54 PM  

The State Ministry of State Enterprises announced Monday it would cancel plans to privatize several state companies which are currently struggling financially. 

“We are now reviewing state companies in our privatization list and have decided so far to drop (plans to go public of) some of them,” State Ministry of State Enterprises secretary Said Didu told reporters. 

He did not elaborate on which companies were to be dropped from the list, but certainly this included those in poor financial condition. 

“These companies will either be acquired by another state company or liquidated,” he said. 

Soda maker PT Industri Soda Indonesia and paper maker PT Kertas Kraft Aceh are among the companies the ministry would soon liquidate, Said explained.  

Last December, the ministry announced plans to sell shares in 30 state owned companies this year, most of them through the initial public offering (IPO) scheme. 

The privatization program includes several IPOs carried-over from last year, including steelmaker PT Krakatau Steel, flag carrier Garuda Indonesia and Bank Tabungan Negara. 

Said added the ministry had to complete its review on privatization plans by the end of January.

Plantation firm PT Perkebunan Nusantara (PTPN) IV was among the companies ready for privatization, according to Said. 

PTPN expects to generate Rp 2.8 trillion from its IPO to partly finance expansion plans until 2012, budgeted at around Rp 13.04 trillion. 

The expansion includes the takeover of 77,000 hectares of land for oil palm plantations, the strengthening of downstream activities and revitalized railway construction. 

The plan is expected to boost PTPN’s revenue from Rp 4.46 trillion in 2008 to Rp 6.62 trillion in 2012 and its net profits from 731 billion to Rp 1.55 trillion in 2012.  

Alfaria to Add 400 Stores in ’09

The Jakarta Globe, Aditya Wikrama, January 16, 2009 

Mini-market retailer PT Sumber Alfaria Trijaya Tbk kicked off a moderately successful initial public offering on Thursday by announcing plans to add 400 more stores to its Alfamart chain this year as part of an ambitious Rp 500 billion ($45 million) expansion. 

Shrugging off analysts projections of falling domestic demand this year, the company, which is owned by the powerful Sampoerna family, said it was confident about listing in 2009 because it believed the market for small superette stores was a long way from reaching saturation. 

“We think that there are still a lot of business opportunities in the mini-market retail business, and we’ll use the momentum to expand our business,” said Feny Djoko Susanto, the company’s president director, on Thursday. 

The IPO was in line with a long-term plan to increase public ownership, which also takes the form of direct store ownership through its franchise program, the company said. 

Henryanto Komala, vice president director, Alfaria owns most of its stores with about 23 percent franchised, which the company said would be increased up to 30 percent this year. 

The IPO proceeds of Rp 135 billion will fund the 400-store expansion, and create four distribution centers in Solo, Central Java Province; Balaraja, Banten Province; Palembang, South Sumatra Province; and in Bali. 

The rest of the expansion costs would be financed with the company’s internal cash flow, and perhaps from bank loans, which Alfaria would get from PT Bank Central Asia Tbk, Henryanto said. 

The company said that it still expected revenue to rise 20 percent this year, although growth would be slower than previous years. 

Alfaria’s revenue expanded rapidly from Rp 2.8 trillion in 2005 to Rp 8 trillion in 2008 as its number of retail outlets grew. Between 2007 and 2008, sales are expected to rise 30 percent. 

In the IPO results released on Thursday, the company announced demand for its shares were oversubscribed by just a few percent, with an issue of 343 million shares priced at Rp 395 a share. The company had earlier revised down predictions that its share price could reach more than Rp 400 a share on last year’s growth data. 

Analysts have said that growth in the retail sector is likely to slow in 2009 to between 10 percent and 15 percent, from year-on-year 2008 growth which is expected to come in at between 20 percent and 25 percent. 

In 2008, Alfaria added 500 stores for a total of 2,500 nationwide in head-to-head competition with the Indomaret retailer, owned by the Salim Group. 

Both companies are primarily competing for the lucrative Java market. Alfamart is outnumbered by the Indomaret retailer, which operates more than 3,000 stores nationwide. 

However, the success of the company’s corner stores in urban areas, which also compete with traditional corner shops, known as warung , could mean its target is achieved, an analyst said. 

“Alfamart’s 20 percent revenue growth target [for 2009] is quite optimistic, but it could be reached provided that their expansion is on target,” said Natalia Sutanto, an analyst with PT Ciptadana Securities. Another analyst said that Alfamart’s target could be reached because the retail market had yet to be saturated with mini-markets. 

“As Alfamart products are mostly small consumables — fast-moving goods, which have faster turnover, their revenue growth can be faster than other bigger retailers,” said Ike Rahmawati, an analyst at PT Samuel Sekuritas. 

Sumber Alfaria was founded by the Sampoerna family in 1989. In 2006, the family sold a portion of its Alfa shares to Northstar Pacific, a private equity partner of US firm Texas Pacific Group.

Alfamart`s IPO oversubscribed by 25 pct

Jakarta (ANTARA News/Asia Pulse) - The Indonesian initial public offering (IPO) of retail trading and distribution company PT Sumber Alfaria Trijaya (Alfamart) was 25 per cent oversubscribed, a company official said. 

Alfamart planned to sell 10 per cent of its shares worth Rp135.5 billion (US$12.3 million) in the IPO, an underwriter for PT Ciptadana Securities said. 

Ciptadana and PT Indopremnier Securities have been named underwriters for the IPO with 343.17 million shares to be listed today on the Indonesian Stock Exchange.

Alfaria Sets Share Prices For IPO

Yohanes Obor, The Jakarta Globe, January 7, 2009 

PT Sumber Alfaria Trijaya Tbk, owner of the country’s Alfamart convenience stores, has priced its shares through initial public offering, or IPO, at Rp 395 each. 

In its prospectus, published on Monday, the company stated it was offering 343,177,000 shares with a total value of Rp 135.6 billion ($12.48 million). This offer price is lower than the company’s previous target of Rp 425 to Rp 475 a share. 

The company earlier said it had decided to limit its IPO to a 10 percent stake given a possible lack of investor appetite amid the current global economic downturn. 

As the market regulator, Bapepam LK, has given its approval, the company will offer the shares from today until Friday before listing on the Indonesian Stock Exchange on Jan. 15. 

Two brokerage firms, PT Ciptadana Securities and PT Indopremier Securities, have been appointed as underwriters for the IPO. 

Ang Gara Hans Prawira, Sumber Alfaria’s finance director, said the company expected to open 400 new outlets in 2009, bringing its total to 2,750. As of June, the company had booked sales of Rp 3.6 trillion and net profit of Rp 44 billion.