Wednesday, July 23, 2014

Indonesia Stock Exchange Questions BMTR’s Guaranteed Shares in MNCN

Bisnis.com, JAKARTA – The Indonesia Stock Exchange (BEI) questioned the guarantees of shares owned by PT Global Mediacom Tbk. (BMTR) in PT Media Nusantara Citra Tbk. (MNCN) on loans obtained by BMTR worth US$127.5 million.

In order to disburse the loan to PT MNC Kabel Mediacom (MKM), the lender – the China Development Bank Corporation (CDB) – requested that BMTR guarantee 150% of the value of the loan plus the valuation of the MNCN shares.

MKM is a company controlled indirectly by BMTR.

This answer was delivered by Syafril Nasution, Corporate Secretary of BMTR, through a disclosure of information on Wednesday (7/23); said letter requests clarification from the Indonesian Stock Exchange (IDX) for July 2014.

Via the prospectus, published Monday (7/14), BMTR has stated that MKM has received a loan of US$127.5 million from the CDB.

This loan has a tenure of 7 years, until 2021, including a grace period of 3 years starting from the agreement’s date of execution.

The loan interest rate amounts to the margin added to the 6-month LIBOR interest. A margin of 485 bps without Sinosure insurance or 345 bps with Sinosure insurance is payable every 6 months.

Regarding the loan, BMTR provides a corporate guarantee and backs a stake in PT Medina Nusantara Citra Tbk. (MNCN) amounting to an equivalent of 150% of the loan value, or US$191.25 million.

Loan funds shall be used to finance investments and working capital to develop a network based on fiber optics.

If the MKM project is not on target, BMTR may then lose ownership of the pledged shares in MNC.

“And lose the opportunity to use the guaranteed shares in MNC whenever the company itself is in need of funding,” wrote Syafril.

BMTR is confident in the success of MKM’s fiber optic-based network development project. Therefore, MKM shall provide fiber optic-based network services with fiber-to-the-home (FTTH) technology into the center of many areas where fiber-optic services still do not reach.

In addition, the penetration of subscription television and broadband Internet remains low and unevenly distributed in Indonesia.

The company intends to become the largest media firm and have the most comprehensive service base.

This includes free-to-air television, subscription television by satellite dish, and subscription television and data communications over cable network, in addition to online media, printed media, and radio.

“The company also can create synergies and bundling that will have a positive impact on the company’s growth and the efficiency of its business units,” said Syafril.

The growth of MKM is expected to contribute to revenue, EBITDA, and net income for BTMR beginning in 2016.

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