Debt restructuring of Construction SOEs requires special effort
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Kontan - Pembenahan Utang BUMN Karya Perlu Upaya Khusus
09 June 2021
By: Benedicta Alvinta Prima
Jakarta - Construction state-owned enterprises (SOEs) must be patient. Special effort is required to conduct debt restructuring to recover the company’s balance sheet.
SOE Vice Minister Kartika Wirjoatmodjo said that the construction sector urgently needed restructuring. Moreover, in the last few years, the construction sector has been aggressively constructing infrastructure projects. Hence, there is a mismatch between the project funding and the cash flow financed by short-term debts.
“A special effort is needed to restructure the construction sector,” Kartika said during the event Business Talk held by KompasTV and Kontan on Tuesday (8/6). He hopes that the SOE restructuring can be finished in 2024.
One of the issuers that is restructuring is PT Waskita Karya Tbk (WSKT). As of the end of December 2020, Waskita’s debt to equity ratio reached 1,181.74%. This ratio is worse compared to peers such as PT Wijaya Karya Tbk (WIKA) and PT PP Tbk (PTPP).
Since January 2021, Waskita has stated that they would conduct debt restructuring. In early June, Waskita, through its subsidiary PT Pejagan Pemalang Tol Road (PPTR), signed an agreement to restructure a syndicated loan of Rp4.55 trillion.
“This syndicated loan addendum is expected to positively impact the restructuring process and the business sustainability,” Corporate Secretary Senior Vice President, Ratna Ningrum, said.
Meanwhile, PT Adhi Karya Tbk (ADHI) claimed that its management condition was excellent with long-term debts of Rp5.6 trillion from banks at the end of the first quarter of 2021. “ADHI is currently not in a debt restructuring process and has no bonds due this year,” Adhi Karya Corporate Secretary, Farid Budiyanto, explained on Tuesday (8/6).
Amid the pandemic, ADHI is optimistic about its debt to equity ratio in 2021 matching last year’s, which is around at 1.8 to 1.9.
ADHI’s strategy to maintain its liquidity is to observe the payment acceleration for two major projects that are in construction, namely Jabodebek (Jakarta, Bogor, Depok, and Bekasi) LRT and Aceh-Sigli toll road.
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