Indonesian consumers were more optimistic in July that business activity, income and job availability would improve over the next six months, a survey by the central bank showed on Tuesday (08/08). (JG Photo/Afriadi Hikmal)

Alfamart Operator Plans Rp 1t Bond Issuance, Set Aside Rp 2.9t Capex in 2017


APRIL 12, 2017

Jakarta. Publicly listed retail store chain operator Sumber Alfaria Trijaya is planning to raise Rp 1 trillion ($75 million) from a bond sale to refinance debt, the company announced on Wednesday (12/04).

Sumber Alfaria is the holding company of popular convenience store chains Alfamart and Lawson as well as cosmetics and health care store DanDan and Alfamidi, which is a larger version store of Alfamart.

The bond sale is the first tranche of the company's planned bond issuance of Rp 3 trillion over the next few years.

The company will offer the bonds in two series. Series A bonds will mature in three years, with a coupon rate ranging from 8 percent to 8.5 percent. Series B bonds will mature in five years, with an 8.1 percent to 8.6 percent coupon rate.

"We will use all the proceeds to refinance our [existing] bonds," Sumber Alfaria Trijaya president director Anggara Hans Prawira told the media.

The proceeds from the sale will be used to redeem two series of bonds totaling Rp 1 trillion the company issued in 2014. The bonds have annual coupons of 9.7 percent and 10 percent.

The company appointed Mandiri Sekuritas and BCA Sekuritas as underwriters for the new bond sale.

Fitch Rating Indonesia, local unit of the global credit assessor, has affirmed an AA- bond rating, reflecting low risk of default compared to the company's domestic peers.

Sumber Alfaria has set a book-building period for April 12-28 and will offer the bonds on May 17-18, before listing them on the Indonesia Stock Exchange (IDX) on May 24.

Expansion Plan

Meanwhile, the company has set aside Rp 2.9 trillion in capital expenditure for this year, which is a 32 percent increase from last year. It will use 90 percent of that for expansion by opening more stores, while the remainder will be allocated to building storage facilities in Manado, North Sulawesi and Bali.

Sumber Alfaria plans to open at least 1,500 stores throughout the archipelago this year. The company has so far opened 400 stores in the first quarter, mostly outside Java.

"We are using around 70 percent of our internal cash and the remainder from bank loans to fund our capex," Sumber Alfaria finance director Tomin Widian said.

Through its subsidiary, Alfamart Retail Asia, the company also plans to open between 100 and 125 additional Alfamart outlets in the Philippines, to add to the 200 existing stores, Tomin said.

The company operates in the Philippines as a joint-venture between Alfamart Retail Asia, which holds a 35 percent stake, and Philippine-based SM Retail Supermarket, a subsidiary of tycoon Henry Sy’s SM Group, which controls the remaining stake.

As of last year, the company had 13,745 stores in Indonesia, employing 132,000 workers. It also had 40 storage facilities.

The company and its competitors experienced a slowdown in sales in the first quarter of this year, but it expect sales to increase in the third quarter before the Idul-Fitri celebration, Tomin said.