Indonesia’s state-owned enterprises ministry plans to top up equity investments in two construction firms by 30.5 trillion rupiah ($2.05 billion) by 2024 to help ease companies’ financial troubles, an official said on Monday.
The plans were unveiled in a hearing with parliament’s committee overseeing state investments. Any capital injection into state companies must be approved by parliament.
The government wants to inject 12.5 trillion rupiah by early 2024 into Hutama Karya, which is fully owned by the government, so that it could take over two toll road projects from builder Waskita Karya, which is having trouble paying back its debt, deputy minister Kartika Wirjoatmodjo said.
The finance ministry has withheld a 3 trillion rupiah capital top up for Waskita, even though the capital injection had been approved for fiscal year 2022, after the firm failed to secure bondholders’ approval to defer a coupon payment due in May.
Trading of Waskita’s securities was suspended last month for the second time this year due to the failed negotiation with bondholders.
“We are not ruling out the possibility of topping up (the capital injection proposal) in case of increasing needs under the restructuring. We are recalculating and discussing with the finance ministry how far we are going to push in terms of capacity needed to make Waskita healthy again,” Kartika said.
Another 8 trillion rupiah equity injection was requested for state-controlled Wijaya Karya (Wika) to strengthen its capital position, while the firm negotiates its debt, said Kartika.
Wika has asked its lenders for a debt service payment standstill, Kartika said.
The ministry also requested 10 trillion rupiah for Hutama Karya in fiscal year 2024 to fund operational expenses, according to its presentation materials to parliament.
Kartika said Waskita may be put into Hutama Karya’s group after the firm completes its debt restructuring.
Ratings agencies have warned in the past few years that the balance sheets of Indonesian state construction firms were deteriorating amid extensive borrowing to fund an infrastructure push led by the government of President Joko Widodo.
($1 = 14,877.0000 rupiah)
Reuters