Gresik to issue bonds to finance new plant, Indonesia

Gresik to issue bonds to finance new plant, Indonesia
Published: 02 August 2006

Publicly listed cement maker PT Semen Gresik is planning to issue bonds in the second semester of 2007 to finance construction of a Rp3-trillion cement plant in Java, a company spokesman said.

"The purpose of issuing the bonds is to raise money to finance the construction of a new cement factory," President Director of PT Semen Gresik Dwi Sutjipto said.

Speaking on the sidelines of an "Indonesia Investor Forum" at Mulia Hotel, Dwi Sutjipto said the factory would be built with Rp1 trillion to be taken from the company’s internal cash reserves and the rest from other sources such as bond issuance or bank loans. But Dwi did not reveal the value of the bonds the company would issue, saying only the project would be located in Java island.

"We will certainly issue the bonds because we want to remain listed in the bond bourse," he said.

He said that on July 12, the company paid off matured bonds worth Rp409 billion. "By paying off the bonds, we have room to seek funding outside the company," he added. Dwi said that the reason for the factory to build the factory in Java was that 60 per cent of cement market in the country were in Java.

"The development of the factory in Java is an effort to anticipate the market demand for cement in the country in 2010, when the factory is expected to have been in full operation," Dwi said.

The plan to issue the bonds would also become one of the agenda of the company’s Extraordinary Meeting of Shareholders, apart from the replacement of members of the board of directors and board of commissioners.

The replacement of the management members will take place after the entry as a shareholder of the Rajawali Group into PT Semen Gresik.