0 Gajah Tunggal Plans $500 Bond Sale

Gajah Tunggal, Indonesia’s largest tire maker, plans to sell up to $500 million in bonds to finance its Indonesian business expansion may follow a series of investor meetings. The company has hired Credit Suisse, Deutsche Bank and HSBC to help arrange a series of bond investor meetings from Wednesday, according to a person with knowledge. The US dollar Regulation S 144A bond sale may follow the meetings, the person said, according to Bloomberg. According to the company’s December prospectus published in Bisnis Indonesia, the coupon on the notes is set at the maximum of 10 percent and will mature in 2017. 

Some of the proceeds from the sale will be used to partially repay maturing debt. “The company will use the bulk of the proceeds from the sale to buy back bonds issued in 2005,” the company said in the prospectus. “It will use the remainder of the proceeds to boost the company’s capital.” In 2005 the company sold $400 million worth of notes at 10.6 percent that will mature in July 2014. Gajah Tunggal distributes Michelin passenger-car and light-truck tires, including the BFGoodrich brand in Indonesia. 

Gajah Tunggal’s revenue rose 7.6 percent, to Rp 9.4 trillion ($975 million), in the first nine months of this year from Rp 8.7 trillion last year, the company said on its website. The company operates five tire and inner-tube manufacturing plants in Indonesia and operates two production facilities which manufacture tire cord and styrene-butadiene rubber. Its five tire plants and tire cord plant are located in Tangerang, Banten, while its SBR plant is located at a Chemicals Industrial park in Merak, also in Banten. Companies like Gajah Tunggal are reaping the benefits from increasing car sales in Indonesia. 

The country’s car sales hit a record high of 1.1 million in 2012, according to data from the Indonesia Automotive Industry Association (Gaikindo). The company was founded by Sjamsul Nursalim and Denham is the major shareholder with 49.7 percent ownership. Compagnie Financiere Michelin owns 10 percent, and the remaining 40 percent is owned by the public. Other Indonesian companies such as Bank Rakyat Indonesia, the country’s second largest lender by market, and Bank Mandir, are planning to sell bonds. BRI plans to sell Rp $500 million dollar-denominated bonds and Bank Mandiri plans to sell between $500 million and $800 million in bonds.

source : the jakarta globe