Jakarta, June 14 - Coal miner Toba Bara Sejahtra has cut the scale of its initial public offering later this month to better reflect market concerns over the debt crisis in the euro zone.
The Jakarta-based company reduced the size of its share sale to 15 percent of its enlarged capital, or 317.9 million shares. That was lower than the original plan of between 20 percent to 25 percent.
Toba Bara will be the seventh company to hold an initial public offering on the Indonesia Stock Exchange this year.
The company will price itself at between Rp 1,850 to Rp 2,400 per share, said Laksono Widodo, a director at Mandiri Sekuritas, which is one of the underwriters for the IPO. Toba Bara expects to raise as much as Rp 763.12 billion ($81 million) from the sale.
Indonesia’s benchmark stock measure the Jakarta Composite Index, which rose 3.2 percent last year, has fallen 8.5 percent from its record high of 4,224 on May 3. The mining sector has lost 21 percent so far this year as energy and metal prices declined. Indonesia and other emerging market were hit by massive sell-offs in recent weeks on concerns about the euro zone debt crisis.
Toba Bara will offer the shares to investors on June 27-29, with a planned listing on the exchange on July 5.
Toba Bara, founded by former trade minister Luhut B. Pandjaitan in 2010, originally planned to offer a stake of 20 percent to 25 percent in its IPO, the company had said in December.
“The company is considering the volatility in the market right now,” said Pandu Sjahrir, finance director at Toba Bara. He said that concern of the European debt crisis was affecting market sentiment, especially in commodity-related sectors.
“For now, the 15 percent is enough,” Pandu added.
Laksono said that foreign investors had also expressed interest in buying shares in Toba Bara.
The company will meet investors in Singapore, Hong Kong and the United States to gauge demand for the stock.
The firm will use 15 percent of the proceeds to help refinance its debt to BNP Paribas, which stands at $35 million. Pandu said the company would pay off about half of its debt to BNP this year.
The company will use another 35 percent of the proceeds to finance new coal mining concessions. The remaining 50 percent will be used to finance the capital expenditure related to its coal mining activities.
“Most of the capex will be used for exploration and helping to increase production,” Pandu said, adding that the company had only explored about half of its coal concession area, which covers more than 7,000 hectares in East Kalimantan.
Justarina Naiborhu, president director of Toba Bara, added that supporting infrastructure for Trisensa Mineral Utama, its mining subsidiary, would be built.
Toba Bara set its capital expenditure at Rp 270 billion this year. Justarina said that some of the capex financing will also come from bank loans.
Toba Bara expects its coal production to increase to 7.6 million metric tons this year from 5.2 million tons in 2011.
Catherine Warouw, marketing director at Toba Bara, said coal prices this year would fall to levels at less than last year’s low of $93.9 per ton. But she said the company was poised to match last year’s revenue of Rp 4.3 trillion.
Toba Sejahtra, the holding company that controls Toba Bara, has four business divisions: coal and mining; oil and gas; power generation; and agriculture and forestry.
(Jakarta Globe)
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