Trump’s Indonesian Property Partner Plans Dollar Bond Buyback

23 Jun 2020, 01:54 PM IST

(Bloomberg) -- Indonesian conglomerate MNC Investama, founded by tycoon Hary Tanoesoedibjo, is planning to buy back its dollar bonds amid the pandemic.

The company will hold talks with the holders of its $231 million notes due 2021 and expects to complete the partial buyback of the securities in October, Tanoesoedibjo said in an interview on Monday.

“With the pandemic happening, the prices of so many dollar bonds are falling,” he said. “We have not officially proposed anything to our bondholders, but maybe we can buy back the bonds at an agreed price. Maybe not all because it’s almost impossible to buy back 100%.”

The conglomerate has businesses ranging from media to property, including Trump-branded luxury resorts that are under development. It had previously been trying to push back the date on which its dollar bonds come due, adding to a growing list of borrowers in Asia taking similar steps as the pandemic increases financial strains.

Funds to finance the buyback would come from its shareholders or through a capital call. Tanoesoedibjo said he had an initial discussion with related parties and 60%-70% of them indicated they favored the plan. The company is also seeking to gradually reduce the debt exposure of the subsidiaries within the group, he said.

Rethinking Business

With the pandemic forcing firms all over the world to review their business approach, MNC Investama is planning to conduct some adjustments and is now putting the brakes on new investments.

“The Covid-19 pandemic has made us realize the importance of strong capital structure,” Tanoesoedibjo said. “We want to rely more on capital than on debt.”

Subsidiary PT Media Nusantara Citra, its advertising-based media and content firm, is looking to partially repay its dollar term loan in the second half of this year. Media Nusantara has $201.25 million outstanding of a loan, which will mature in August 2022, according to data compiled by Bloomberg. While the amount of loan to be retired may not account for half of the total, the figure will still be significant, Tanoesoedibjo said.

A capital injection via private placement is in the pipeline for units PT MNC Kapital Indonesia and PT MNC Land as well. While MNC Investama hasn’t decided how much money would be injected into financial firm MNC Kapital, the private placement for MNC Land may account for 10%-20% of its paid-up capital.