PT Semen Bosowa, a unit of Bosowa Corporation, has planned to arrange initial public offering (IPO) in 2008 to generate IDR1 trillion.
The CEO of Bosowa Corporation Erwin Aksa said the company will use the money to cut the debt and to expand the production facilities.
The enterprise value of Semen Bosowa is IDR2.5 trillion with the EBITDA of IDR200 billion in 2006.
The total debt is IDR1.7 trillion, IDR1.1 trillion of which are in bonds.
Following the IPO the company should be able to increase the production capacity from two million tons per annum to four million tons by developing Line II of production.
In the meantime the company is considering acquiring cement packaging company of Bosowa Corporation to increase the assets as well as the revenue of the company.
"The IPO should be in early this year, depending on the readiness of everything. The IPO is merely on Semen Bosowa as the size is big enough. We are still considering to how much shares to sell. The point is that we want to cut our debt and to expand the business."
He went on saying that the company is waiting for the final decision of Bank Mandiri and BNI on the company’s plan to repay the total debt of IDR1.4 trillion in a bid to improve the outlook of the company.
"The normal debt to equity ratio of cement industry is 50:50. DER of Semen Gresik, however, is 80:20... so sound. Our DER is still 20:80," he said.
He added, however, that Bosowa’s financial condition is sound as the IDR600 billion debts are commercial one and the rest IDR1.1 trillion is the long term debt.
The company has carried the bonds since before the crisis of 1997-1998. The debt was IDR600 billion and it has been IDR1.7 trillion.
Following the debt restructuring, the total commercial debt of the company should be IDR600 billion and the rest is bonds.
He said the demand and price of cement have been better, but it was still at the pre-crisis level. But as the production cost has increased the company has decided to expand the business to cut the cost.