Bakrie raises USD58m to pay bonds

3 Sep 2012

The Jakarta Globe reports that Indonesia’s Bakrie Telecom, the telecoms arm of local conglomerate the Bakrie Group, has raised IDR557 billion (USD58 million) through the sale of shares through a non pre-emptive rights offering. It is understood that another Bakrie Group company, Bakrie Global Ventura, acted as the principal buyer for the sale which was priced at IDR265 per share – more than double Bakrie’s current stock price. The non pre-emptive rights offering effectively waives the right of existing shareholders to maintain their ownership status in a given company, so that the shares on offer can be sold to an agreed party.

Bakrie Telecom plans to use the proceeds of the sale to help re-finance its maturing bonds; it has IDR650 billion worth of bonds due tomorrow (i.e. Tuesday). In July this year the telco secured a USD50 million loan to pay its bondholders this week, but concerns have been raised about the operator’s ability to service its debts. In the same month the CDMA wireless operator failed to raise enough funds to repay IDR650 billion of loans due to mature in August. The news was 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.

Indonesia, Bakrie Telecom (BTel)