PT Cikarang Listrindo tbk (POWR) that recently did IPO will issue bond of US$ 550 million which is 3 times from the previous stock sales and might make a high debt ratio. Is POWR still a safe stock?
The company is targeting to raise the interest rates by 4.95% or pay US$ 27 million each year until 2026. The bond sales fund will be used to pay US$ 500 million that ends by 2019. The remaining fund will be used for work capital, which means that the company reduces the interest cost from 6.95% to 4.95%. The cash flow from operating activity seems fine with the debt.
The old tenor debt shows compatibility between asset and liabilities (asset-liabilities matching). Therefore, the bond is expected not to disturb the previous operational that has succeed to sell its share with a premium price.
Add Comment