Concrete columns for the Greater Jakarta LRT tracks are being laid out in Ciracas, East Jakarta, in March this year. (Antara Photo/Andika Wahyu)

Construction Giant Adhi Karya Seeks to Raise $260m in Bond Sale


JUNE 19, 2017

Jakarta. State-owned construction company Adhi Karya expected to raise Rp 3.5 trillion, or $263 million, from a bond sale on Monday (19/06) to pay back debts and fund future business expansions, the company wrote in a filing to the Indonesia Stock Exchange.

The company offered the bond to investors on Monday and will officially list it on July 3. Danareksa Sekuritas, Bahana Sekuritas, BCA Sekuritas and Mandiri Sekuritas were appointed as underwriters for the sale. Monday's offering was the first batch of Adhi Karya's multiple years bond sale to raise Rp 5 trillion in proceeds.

Adhi Karya will seek to raise Rp 2.73 trillion in five-year bonds offering annual coupon rates of Rp 9.25 percent per year. The remainder of the targeted proceeds will be offered under the "best effort" scheme, in which the sale's underwriters will return the debt papers to the issuer if the predetermined target is not met.

State credit agency Pefindo confirmed Adhi's idA- national rating, suggesting a low default risk compared to competitors.

The company will allocate Rp 500 billion from the sale's proceeds to redeem its Islamic bond, or sukuk, that will mature on July 3, and a conventional bond, which matures on July 15 and offers an annual coupon rate of 9.5 percent. Both were issued in 2012.

Adhi Karya also plans to use Rp 800 billion in the proceeds to fund construction projects, including a light-rail transit project in Jakarta, which the company secured rights to in 2015. Subsidiaries Adhi Persada Gedung and Adhi Persada Beton are currently managing development on the LRT system.

The remainder of the proceeds will be allocated to the company's working capital.

The government-backed LRT project, worth over Rp 23 trillion in investments, is scheduled to completed by 2018.

By selling conventional bonds, Adhi Karya sacrificed an option to issue perpetual bonds, still classified as fixed income securities with no maturity date, to fund the ambitious LRT project.

Adhi Karya booked Rp 5.3 trillion in new contracts in the first five months of 2017, a similar amount to the corresponding period last year.