Indonesia’s Bakrie fails to secure funding for debt repayment

20 Jul 2012

Indonesian CDMA wireless operator PT Bakrie Telecom has failed to raise enough funds to repay IDR650 billion (USD69 million) of loans that mature in August 2012, The Jakarta Post reports. The news is a blow to the operator which recently had its debt put on a negative watch rating by Fitch amid concerns about its ability to service and roll over its debt. By the start of the second quarter of this year, Bakrie could only bank on liquid assets of IDR215 billion (in cash and equivalents) and has since failed to raise sufficient additional funding.

According to TeleGeography’s GlobalComms Database, in April this year stakeholders in Bakrie Telecom approved a plan to issue new shares equivalent to approximately 10% in the enlarged firm, worth around IDR754 billion, to pay off debt and to acquire a stake in fellow CDMA provider PT Sampoerna Telekomunikasi Indonesia (STI). Bakrie president Anindya Bakrie confirmed the move, adding that the new shares would be offered at a minimum price of IDR265 per share – a premium on the firm’s closing price of IDR255 at that date. Anindya went on to say that several strategic investors had shown an interest in buying the shares. ‘They are very enthusiastic because they see that the valuation in the rights issue is not the highest value [Bakrie Telecom] has ever achieved. It can be considered as value investing,’ Anindya said. However, it appears that the merger plan has failed to convince investors that an enlarged company can compete with the larger GSM/3G rivals.

Bakrie Telecom vice president Justiro Abi says that the company is in the throes f attempting to secure loans from Credit Suisse to repay the maturing debt, adding, ‘We are targeting to reach a deal this month’.

Indonesia, Bakrie Telecom (BTel)