Debt restructuring race between Wijaya Karya and Waskita
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 - Adu cepat restrukturisasi utang Wijaya Karya dan Waskita
7 November 2023
By: Muawwan Daelami
Jakarta - PT Wijaya Karya Tbk (WIKA) and PT Waskita Karya Tbk (WSKT) are restructuring their debts to strengthen the companies’ capital structure. The restructuring of the two construction state-owned enterprises (SOEs) will be supported by state equity participation (PMN) in fiscal year (FY) 2024 worth Rp6 trillion for Wika and Rp12.5 trillion for Waskita through PT Hutama Karya.
The analyst team of PT Pemeringkat Kredit Indonesia (PKRI) that consists of Bilawal Zandra Faris and Stefanus Yuniardhi Thio predicts that the restructuring process of Wika and Waskita will face different situations. In the first half of 2023, Waskita’s EBITDA was negative, which will worsen their net leverage. On the other hand, Wika logged a positive EBITDA in the first half of 2023, so their leverage and interest coverage will be relatively better.
On 25 October 2023, Wika’s restructuring plan has been approved by shareholders and several bond holders. Meanwhile, Waskita has yet to obtain an approval from related parties.
“Hence, we see that Wika’s restructuring process will be completed faster than WSKT’s,” Bilawal and Stefanus said in their research that was quoted by Investor Daily on Monday (6/11/2023).
Regarding the PMN that will be received by Wika and Waskita, Bilawal and Stefanus sees that the injection will not significantly affect the financial position of both construction issuers. The PMN is meant to complete national strategic projects (PSNs) as President Joko Widodo’s term is ending soon.
“So, the PMN will strengthen their liquidities, but it will not be enough to improve their fundamentals as debt dynamics and operating costs can change at any time,” PKRI Analyst Team wrote.
Wika plans to use the Rp6 trillion PMN to work on 41 PSNs. Meanwhile, Waskita’s PMN through Hutama Karya will be spent to complete Kayu Agung-Palembang Betung (Kapal Betung) Toll Road that costs Rp10 trillion and Bogor-Ciawi-Sukabomi (Bocimi) Toll Road that costs Rp2.5 trillion.
Establish routine communication
On a separate occasion, Wijaya Karya Corporate Secretary Mahendra Vijaya explained that, in the restructuring phase, the company was committed to proactively establishing communication with stakeholders and routinely delivering new updates on the company’s performance and efforts. The company has prepared eight restructuring methods.
“The company sees that Wika has good intention to fulfil all their obligations to stakeholders. Support from stakeholders is crucial to achieve recovery as planned, which will optimally impact business continuity and provide many benefits to stakeholders and citizens,” Mahendra said to Investor Daily on Monday (6/11/2023).
Hence, he continued that the company appreciated all employers that still trust Wika. “It is proven by the company’s new contracts that have increased by 12.5% until September 2023 from last year,” Mahendra said.
Awaiting creditor approval
On a separate occasion, Waskita Karya Corporate Secretary SVP Ermy Puspa Yunita revealed that a PMN worth Rp12.5 trillion would be received by Waskita through PT Hutama Karya. The fresh funds will be used to complete Kapal Betung and Bocimi toll roads.
“Waskita is also in the final review process of the Master Restructuring Agreement (MRA),” Ermy revealed to Investor Daily on Monday (6/11/2023).
He affirmed that the company was continuously obtaining approvals from creditors so that the newest restructuring scheme can be implemented immediately. So, the implementation of the restructuring can improve Waskita’s financial performance to be more sustainable in the short term and in the long term.
“The company has also obtained approvals from most banking creditors. Approvals from creditors are expected to be obtained in December 2023,” Ermy concluded.
