JAKARTA. PT Perkebunan Nusantara (PTPN) X, a state-owned sugar mill company, plans to issue Rp 700 billion (US$70.7 million) in bonds to pay their debt to PT Bank Rakyat Indonesia (BRI).

Finance director Dolly Pulungan said on Monday that the company would use Rp 300 billion to pay off its debt to the state lender and the rest to boost the company's sugar production, including Rp 280 billion to replace old machinery. He earlier said in April that the company would buy 20 sugar machines.

Dolly said the company's debt reached Rp 900 billion, including Rp 300 billion to BRI and Rp 550 million to Bank Mandiri. The total debt is yet to include the amount of debt generated from the company's bonds.

The book building for the bonds started on June 17 until June 24. They expected to have the offering on July 1-2 and the listing on July 8 as they were still waiting for the permit from the Financial Services Authority (OJK).

The bonds are offered at a coupon rate of between 8-9 percent, with a five-year maturity. With a rate of A+ from local rating agency PT Pemeringkat Efek Indonesia (Pefindo), debt security is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than higher-rated debt.

PTPN X owns 11 sugar mills throughout East Java and three more mills in South Sulawesi. Besides producing sugar for the country, PTPN also produces tobacco and manages three hospitals in East Java. (The Jakarta Post)

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