Indonesia’s largest poultry company, PT Charoen Pokphand Indonesia (CPIN) signed a syndicated loans agreement — worth the equivalent of US$500 million — with 20 banks in Jakarta on Monday.
The company, which is part of Thailand’s agro and food conglomerate Charoen Pokphand, said it would use the loans to refinance its debts and fund future expansion projects.
DBS Bank Ltd., Citibank Indonesia, ANZ Indonesia and Sumitomo Mitsui Banking Corporation acted as the loans’ mandated lead arrangers and book runners.
The loans, amounting to $325 million and Rp 2 trillion ($176.16 million), would be disbursed in two tranches, according to the agreement.
The first tranche will see $130 million and Rp 800 billion offered as amortizing-term loan facility that will mature in five years, while under the second tranche, Charoen will be able to borrow $195 million and Rp 1.2 trillion as revolving credit facility with three-year and two-year tenors, respectively.
According to Charoen director Ong Mei Sian, $200 million would be used to refinance the company’s previous syndicated credit facility, issued in 2011 and due in 2014, while “the rest of the funds will be allocated to our expansion projects over the next five years”.
No specific amount had been allocated to its expansion plan, Mei Sian said, while it would continuously increase production capacity to meet an annual growth target of 15 percent.
The publicly listed firm now operates seven feed mills, 80 breeding farms, 43 hatcheries, four processed chicken meat facilities and over 2,500 distribution agents across the country.
This year, it aims to produce 900 million day-old chicks (DOCs) and 96,000 tons of food products from the facilities, up from 800 million DOCs and 72,000 tons of food products recorded in 2012.
Charoen plans to diversify its downstream food products, “such as beverages or other food items, because we already have the distribution channels,” which would increase revenues from the food division, according to Mei Sian.
The food division now makes up 9 percent of Charoen’s total revenues, with the lions share of 71 percent from feed sales, while sales of DOCs and other products contribute 17 percent and 3 percent, respectively.
The firm has yet to publish its third quarter results, but Mei Sian said progress to book the 15 percent growth target, equal to Rp 24.51 trillion in revenue, was on track for year-end.
However, rising food commodities and foreign exchange volatility will most likely squeeze Charoen’s net profits as half of its raw materials are imported and bought in US dollar.
Last year, it posted a 14 percent surge in net profits to reach Rp 2.68 trillion.
Meanwhile, its first half financial report shows that Charoen’s revenues rose by 17 percent to Rp 11.98 trillion, but its net profits were down 9.4 percent to Rp 1.53 trillion.
The company’s shares ended at Rp 4,125 on the stock exchange on Monday, up 3.1 percent from last Friday.