Medco to issue US$100 million bonds

as published in Bisnis Indonesia daily newspaper

Tuesday, 22/12/2009 00:00 WIB

Medco to issue US$100 million bonds

JAKARTA: PT Medco Energi Internasional Tbk plans to issue medium term notes (MTN) worth US$100 million early next year to refinance corporate debt, investment, and working capital.

The plan is unveiled by PT Pemeringkat Efek Indonesia (Pefindo) yesterday. The rating company here gives AA- level for the MTN issuance scheme.

The same rating was either given to the A series II/2009 bonds worth IDR513.5 billion and the B series worth IDR986.5 billion maturing in 2012 and 2014 respectively.

Analyst of Pefindo Ronald Hertanto and Vonny Widjaja said the rating reflected the relatively competitive oil and gas production cost and liquidity above the average.

"However the rating was limited by the finance performance plummet, production decline from some fields with limited reserves, suspension of some main projects, and more aggressive corporate debt due to the mounting spending of capital and uncertain asset divestment plan," they said.

The negative prospect rating is given to anticipate the worsening corporate finance performance.

"This includes the negative impact of the oil and gas price fluctuation, oil and gas production plummet, and some major projects suspension," he said.

Pefindo considered the quite poor performance here could hardly have compensation from the corporate plan of asset divestment.

The progress is potentially to weaken the corporate financial performance in the medium term.

On December 3, 2009, Finance Director of Medco Darwin Cyril Noerhadi said the capital expenditure 2010 stood at US$150 million or the same as that of in 2009 and 2008.

The amount here excludes the expansion of non organic such as acquisition.

Medco management also studies the use of stocks in portfolio of 11.72 percent through direct sales, collateral, or convertible bond issuance.

Cyril added the company now has 11.72 percent portfolio stocks.

The number of stocks could exceed 10 percent as it follows the capital market authority policy calling the public company to have stock buyback up to 20 percent to reduce the global finance crisis impact in October 2008.

"As to the Bapepam-LK regulation, we are allowed to keep portfolio stocks for three years. It means it has one year left (up to 2010)," he said yesterday.

The management has been exploring the convertible bonds issuance option, direct sales, or collateral for the corporate loans in the future.

Based on the data, the total shares issued by Medco are 3.33 billion.

Assuming 11.72 percent shares of the total shares participated by Medco of 390.56 million and the stock market yesterday was IDR2,500 per share. Thus the Panigoro's oil and gas firm here could tap up to IDR976.40 billion fund from the sales of treasury stocks. (Bisnis/pul/21)