Bisnis Indonesia sources said the company will issue the convertible bonds after the issuance of US$500m bonds in January 2008.
"The company will issue US$500 million loan and then it will issue the convertible bonds. They are still calculating the volume," he said.
The issuance of the bond may dilute the government’s and Rajawali’s stakes of 51% and 24.9% respectively.
Semen Gresik has to get parliamentary approval to issue such bonds as it may lower the government’s ownership.
The Vice President Director of Semen Gresik Rudiantara said he did not know the plan yet.
The company needs additional capital of US$200 million in addition to US$1.3 billion in the previous plan to finance the development of two power plants.
The Finance Director of Semen Gresik Cholil Hasan said that each of the power plants needs the investment of US$100 million.
"With such financing we will need US$1.5 billion of total financing. We are still working on who will be the source."
The company will spend US$500 million from internal cash reserve and the rest will be from external financing.
Rudiantara said the company will develop power plants in Tuban, Indarung, Pangkep and near the new facility the company will develop. "The total capacity is 410MW with the cost of US$1.2 million per MW. We will develop two facilities in Java and outside Java."
Semen Gresik President Director Dwi Soetjipto added the company will arrange a tender to get underwriter. "We may need two underwriters."
Semen Gresik will issue dollar bonds, rupiah bonds and to get bank loan.
"We will do that for hedging purpose," he said. Dwi said the company should produce 17.6Mt of cement next year compared with 17.1Mt this year.
In the meantime Indonesia’s second largest cement company PT Indocement Tunggal Prakarsa announced that its three quarters profit has increased by 25% on the higher sales and the lower interest rate.