Construction SOE restructuring: Important points for WIKA and WSKT
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.
Bisnis Indonesia - Restrukturisasi BUMN karya: Titik penting WIKA & WSKT
24 November 2023
By: Dionisio Damara
Jakarta - Restructuring efforts are continuously carried out by PT Waskita Karya (Persero) Tbk (WSKT) and PT Wijaya Karya (Persero) Tbk (WIKA). The approval of debt security holders will be the deciding factor at the end of this year.
Currently, Wijaya Karya is continuously trying to obtain an approval from the company’s debt security holders for their restructuring.
WIKA Corporate Secretary Mahendra Vijaya said that the company’s restructuring efforts have been approved by shareholders and bondholders. Hence, the construction state-owned enterprise (SOE) issuer will also obtain an approval from sukuk holders.
“The company hopes to continuously receive support from bondholders and sukuk holders in the future,” he said when contacted by Bisnis on Wednesday (22/11).
On Friday (10/11), Mahendra said that WIKA would conduct a general meeting of sukuk mudharabah holders (RUPSU) on Wijaya Karya Continuous Bonds I Phase I Year 2020 on 30 November 2023. At the RUPSU, WIKA will propose to delay the payment of mature bonds and sukuk in December 2023. Moreover, they also aim to request a waiver for the financial ratio on consolidated financial statements as of 31 December 2023.
“However, for coupons, the company is planning to provide the payments on schedule. The amount will also not be altered. It is a win-win solution for stakeholders,” he said.
In the future, Mahendra said that WIKA would implement restructuring through eight streams, namely financial restructuring, governance and risk management enhancements, receivable disbursement acceleration, and asset recycling alignment to the business model.
Besides that, the company will also focus on refining their orderbook portfolio, making operating costs more efficient, reducing the supply chain financing balance, strengthening the capital structure in accordance with what has been approved at the extraordinary general meeting.
Meanwhile, Waskita Karya is committed to carrying out recovery efforts to ensure that the restructuring process will be completed at the end of this year.
Waskita Karya Corporate Secretary SVP Ermy Puspa Yunita said that the company was targeting to complete the restructuring process at the end of 2023. Most banking creditors have approved the restructuring scheme proposed by the company.
Besides that, communication with all creditors, banks, stakeholders, and the SOE Ministry is continuously carried out to complete the restructuring process as soon as possible.
Currently, Ermy said that the construction SOE issuer was still engaged in intense discussions regarding the master restructuring agreement (MRA) with all creditors, including banks and bondholders.
“The approval is an important point for Waskita to implement the restructuring scheme, granting the company greater flexibility in managing its cash flow towards establishing a more sustainable operational cycle,” she stated.
Ermy continued that it would also help Waskita Karya complete their obligations to all creditors, including banks, bondholders, and vendors.
In the final stage of the restructuring process, Waskita Karya will request for an approval from all bondholders through a general meeting of bondholders that will be held at the end of November 2023.
Besides that, the company will also focus on obtaining an approval to implement the restructuring scheme from all banking creditors, including banks in the Association of State-owned Banks (Himbara) and private banks.
“All banks in Himbara and several private banks have approved Waskita’s restructuring scheme that represents around 80% of the total outstanding debt amount. The company also hopes that the bondholders can approve the MRA scheme,” Ermy said.
Ermy said that Waskita has returned to its fundamental role as a contractor, adopting a more selective approach when considering new projects. For instance, projects must ensure payment certainty, down payments, and regular monthly payments. Additionally, each project must undergo scrutiny by the construction risk management committee.
Restructuring solution
When he was contacted by Bisnis, Segara Research Institute Executive Director Piter Abdullah reckoned that the financial problems of construction SOEs were mostly related to cash flow. With that condition, restructuring is an effective solution to solve the problem.
“They are currently bleeding as their spending surpasses their income. This condition must be fixed by restructuring, particularly focusing on alleviating the expense burden and diversifying income sources,” he said to Bisnis.
According to him, the main task of the government as the main shareholder of construction SOEs is to convince all parties to support restructuring so that the problem can be solved.
“The government must show all parties the pros and cons of restructuring. They must also convince the creditors. Without restructuring, all parties will suffer losses,” he said.
On a separate occasion, Kiwoom Sekuritas Indonesia President Director Changkun Shin also reckoned that restructuring was a suitable step to be taken by construction SOEs. However, if the scheme fails, the company’s share price will be under pressure.
For WIKA’s shares, Shin recommends investors to wait and see for a suitable momentum. He mentioned this recommendation while awaiting positive news regarding restructuring efforts.
However, according to him, shares of construction SOE companies still have potential as their prices have decreased.
On Thursday (23/11), WIKA’s shares reached Rp384, which decreased by 52% year-to-date. On the other hand, WSKT is still suspended by IDX since May at Rp202 per share.
