Indonesia: Evergreen cuts offerings size; Steel Pipe to launch $250 bonds

Publicly-listed yarn maker Evergreen Invesco has cut two-thirds of its original fundraising target, from Rp 30 trillion ($2.2 billion) to Rp 10 trillion ($747.7 million). With that, it appears that Indonesia’s biggest rights issue in five years will not happen this year, at least not by Evergreen. Still, Rp 10 trillion is a bigger-than-average size for shares offerings in the country.

Meanwhile, in the bonds market, investors are anticipating the launch of manufacturer Steel Pipe’s $250 million notes.

Evergreen cuts proceeds target

Evergreen’s $747 million rights issue has finally received a nod from shareholders, the company announced recently. According to plan, Evergreen with release up to 50 billion new shares- instead of the previously planned 150 billion – at Rp 200 apiece.

The company has never released an official statement as to why the target was cut, but it seemed that investors had not been convinced with the initial plan.

Proceeds from the offering will be used to repay debts as well as business expansion.

An undisclosed third party has been appointed to become the standby buyer, in the case that current shareholders do not participate in the offering. This third party is also a creditor of Evergreen. The creditor could then take up shares not subscribed by the shareholders in exchange for the debts Evergreen has to repay.

There are rumors that businessman Erick Thohir, along with his partners, and insurer AJB Bumiputera (AJBB) are behind this bailing-out action. Recent reports even mentioned Sinarmas Group as one of the potential investors. Neither reports have been confirmed.

Evergreen is a Jakarta-based company engaged in the wholesale of yarns, fiber, and cotton. Its subsidiaries include PT Tristate Indonesia, which is engaged in yarn spinning business, and PT Pacific Multi Industri, which is into wholesaling.

Steel Pipe

Steel manufacturer Steel Pipe Industry of Indonesia is slated to launch a $250 million note – representing 124 per cent of the firm’s total equity. The notes will be listed on the Singapore Stock Exchange (SGX).

“Proceeds from the bond will be used for debt repayment, expansion, and general working capital,” the company says in a filing.

The notes, which has a five-year tenor, has a fixed coupon of 10 per cent a year. Coupons will be paid every six months or any other agreed time period.

Steel Pipe is carrying efforts to improve funding efficiency as well as refine its short-term cash flow. As of September 2016, the company’s short-term liability was at Rp 2.7 trillion.

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