Waskita to modify MRA scheme: Wika reportedly asks for debt restructuring
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.
Investor Daily - Waskita akan modifikasi skema MRA: Wika dikabarkan minta restrukturisasi Utang
9 May 2023
By: Harso Kurniawan &Muawwan Daelami
Jakarta - PT Wijaya Karya (WIKA) is said to ask for debt restructuring to several creditors. From the investigation of CGS-CIMB Sekuritas, three large banks, namely PT Bank Mandiri Tbk (BMRI), PT Bank Negara Indonesia Tbk (BNI/BBNI), and PT Bank Rakyat Indonesia Tbk (BRI/BBRI), will be affected.
Bank Mandiri distributed a loan of Rp3.8 trillion to Wika with a provision of 3%. Meanwhile, BNI distributed Rp1.2 trillion with a provision of 6.7%. BNI is planning to increase the loan provision to 10%.
BRI disbursed a loan of Rp500 billion to Wika with a provision of 100%. Lastly, PT Bank Syariah Indonesia Tbk (BRIS) distributed a loan of Rp273.5 billion to Wika with a provision of 10%.
“From our calculation, for every 5% increase in debt coverage, Mandiri’s net profit decreases by 0.4%, BNI’s by 0.28%, and BRI’s by 0.26%,” the broker wrote as quoted on Monday (8/5/2023).
Wika has yet to comment regarding this matter. “If there is information, the details will be stated,” Wika’s corporate communication team wrote when they were asked for a confirmation by Investor Daily.
Based on Wika’s financial report in the first quarter of 2023, Wika’s total liabilities reached Rp55.7 trillion, which decreased from Rp57.7 trillion in December. The company has short-term loans of Rp9.6 trillion, bonds of Rp8.6 trillion, and sukuk mudharabah of Rp2.7 trillion.
During the period, the company obtained a revenue of Rp4.3 trillion, which increased from Rp3.1 trillion. Wika logged a net loss of Rp521 billion against a profit of Rp1.3 billion.
Waskita’s manoeuvre
On the other hand, PT Waskita Karya Tbk (WSKT) is preparing a scenario to modify the master restructuring agreement (MRA) and the comprehensive restructuring scheme with all creditors, including non-guarantee bondholders. Waskita currently cannot pay for all of their liabilities as they are in a standstill period.
Waskita Corporate Secretary SVP Ermy Puspa Yunita revealed that the standstill period would continue from 7 February to 15 June 2023. During this period, Waskita must give an equal treatment to all creditors, including non-guarantee bondholders.
“Hence, the company cannot make any payment, including to pay for interest and/or financial obligations to creditors, non-guarantee bondholders, and bank lenders,” he said on Monday (8/5/2023).
The standstill is an optimal form of equal treatment to creditors and bondholders. It will give Waskita time to preserve their cash to operate.
Ermy said that it was a response to the step of Indonesia Stock Exchange (IDX) to suspend WASKT’s shares after the state-owned construction issuer had delayed the 11th interest payment for Continuous Bonds IV of Waskita Karya Phase I Year 2020.
Even though the company is faced with share suspension, Ermy affirmed that Waskita was committed to completing ongoing projects. Besides that, the company will still carry out programmes and strategies in line with the set target.
“The company is committed to strengthening the implementation of good corporate governance (GCG), prioritising a profitable and sustainable business, as well as implementing a cautious risk management,” Ermy added.
On the other hand, Pefindo Financial Institution Rating Division Senior Vice President Hendro Utomo said that, with the default case of Waskita and previously PT Waskita Beton Precast Tbk (WSBP), investors would be more selective in investing in corporate bonds, including of state-owned enterprises (SOEs). “This occurrence will affect the appetite of investors,” he explained to Investor Daily on Monday (8/5/2023).
However, he added that the interest of investors in SOE bonds, especially of the ones in the construction sector, did not disappear. In terms of supply, investors still need portfolios that will be due in 2023. Generally, the construction sector is reckoned to still be quite prospective, in line with economic recovery after the pandemic that will increase the demand for projects, especially national strategic projects.
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