Adaro Indonesia sells a larger than expected US$400m bonds
Friday, December 2 2005 - 02:19 AM WIB
Adaro - ranked at Ba3 by Moody's Investors Service and B-plus by Standard & Poor's Ratings Services - sold the five-year paper at 99.005 of face value, to yield 8.75% per year. The coupon was 8.5%.
That was at the bottom of the yield guidance range announced earlier this week of 8.75%-9.0%.
The borrower was originally looking to raise US$300 million with the help of Goldman Sachs and JPMorgan Chase & Co., but elected to increase the bond size after attracting an order book of around US$1.5 billion.
The bonds were sold via Adaro Finance BV, a wholly-owned subsidiary of Adaro incorporated in the Netherlands. The paper is guaranteed by Adaro and PT Bulk Terminal, a coal terminal and Adaro group company.
The bank is also raising four-year amortizing secured bank debt of US$250 million to help refinance the bank and mezzanine debt which were incurred to finance the shareholder acquisition of Adaro and IBT.
Adaro has one of the world's largest sub-bituminous coal mines in Kalimantan, Indonesia, and benefits from a "good operating history, competitive low cost position, experienced management team and solid free cash flow generation as well as the industry's favorable medium-term outlook," according to Moody's.
It said, however, the firm suffers from concentration risk arising from its single product and single site operations as well as exposure to an uncertain regulatory environment for the industry.
Adaro is currently involved in a court case due to be heard in February 2006 in Singapore in which previous shareholder Beckket Pte. Ltd. is challenging the 2002 sale of its stake in the firm.
Deutsche Bank AG sold the stake - pledged as collateral on a US$100 million 1997 loan - after the loan defaulted for around US$46 million.(*)