Delta Dunia Makmur Group Completes US $ 400 Million Senior Notes Issuance

PT Delta Dunia Makmur Tbk (DOID) through its subsidiary, PT Bukit Makmur Mandiri Utama (BUMA), has completed the offering of US $ 400 million of senior notes . Investor orders received during the senior notes offering reached US $ 1.15 billion from 101 parties or was oversubscribed 2.9 times. The bonds with a five-year tenor ( non-callable in two years) are offered with an interest rate of 7.75%. The Company and BUMA have conducted virtual roadshows during 22-25 January 2021, in connection with the offering of senior notes to investors from several countries in Asia, Europe and the United States (US). Meanwhile, JP Morgan (SEA) Ltd and Singapore branch of UBS AG acted as joint bookrunners .

“This transaction demonstrates continued investor confidence in BUMA despite the many market challenges amid the ongoing global pandemic,” explained management in an official statement, Wednesday (27/1). The international rating agency, Moody’s Investors Service, has assigned a Ba3 rating, while Fitch Ratings has assigned a BB- ​​rating to the new senior notes . The outlook for the rating is negative. As planned, the proceeds from the bond issuance will be used to pay off BUMA’s debt obligations under a loan facility with MUFG and BUMA’s senior notes with a 7.75% coupon which will mature in 2022.

As a result, this transaction allows BUMA to extend its debt maturity profile, reduce amortization and increase cash flow, as well as increase operational flexibility to support the company’s future growth. Previously, Moody’s assessed that the action of issuing BUMA’s senior notes was very important to reduce the risk of refinancing. Although actually BUMA’s internal cash sources are considered sufficient to meet all of the company’s cash needs by December 2021. BUMA’s cash balance until December 31, 2020 is estimated at around US $ 100 million.

The Ba3 rating reflects Moody’s assessment, which estimates that debt securities to be repaid constitute the majority of BUMA’s debts in the next 12-18 months. Previously, the Northstar Group, a company controlled by Patrick Walujo, had the potential to release its position as the controlling shareholder of Delta Dunia Makmur. This is a consequence of the mandatory convertible note agreement entered into by Northstar Tambang Persada Ltd (NTP) with Souls Humanity Pte Ltd.