Mandiri Sekuritas Underwrites Adhi Karya's Bonds

PT Adhi Karya Tbk has assigned PT Mandiri Sekuritas to underwrite its IDR400 billion bonds that will be issued within the next three years.

BNP Paribas has issued a research last September saying that the gearing ratio of Adhi Karya, the ratio between net-debt to equity, will be 129.5% and 131.3% this year and next year.

An executive involving in the transaction said that the debt will be with the tenor of five years. The company has planned to use the money to repay its IDR173 billion bonds that will be mature next July.

Adhi Karya's Corporate Secretary Kurnadi Gularso confirmed the company has planned to issue IDR400 billion bonds.

"We invite three security companies to file the proposal to become the underwriter. They are Mandiri Sekuritas, PT Danareksa Sekuritas and PT Andalan Artha Advisindo Sekuritas. Mandiri has got the largest point but we have not sent the letter of assignment," he told me last week.

The Research Head of PT Henan Putihrai Sekuritas Prayogi Ahmad Triono said that the bonds of Adhi Karya will be able to increase the burden of the company. "It would be better if the company increases the equity before issuing new bonds. If it issues new bonds without increasing the equity, the interest burden will be heavier."

The research also said that the obligation on debt repayment will be higher even though the figure has declined last September to IDR200 billion from IDR300 billion in June 2006.
The third quarter report of Adhi Karya said that the largest receivable of the company was from the sector of construction, as much as IDR399.27 billion, compared with IDR190.72 billion on the third quarter of 2005.

The share price of Adhi Karya closed at IDR700 billion last Friday, from IDR720 on the previous day. The financial report of Adhi Karya said it has not got the repayment on investment bonds of US$1.5 million it bought from Jakarta Monorail in October 2004.

Kurnadi said Adhi Karya said Adhi Karya has converted the convertible bonds to 7.5% shares at PT Jakarta Monorail. "The conversion value is IDR13 billion so that it is still under the authority of commissioners to approve." He also said the company will get IDR100 billion from Jakarta Monorail.