Jones Day has advised Berau Coal Energy, one of Indonesia’s largest coal producers, on its $500 million high-yield bond offering of 7.25 percent Guaranteed Secured Senior Notes due 2017, which attracted a head-turning $9.5 billion in orders.
The offering came less than a month after independent Indonesian power producer PT Cikarang Listrindo's new seven-year dollar bond, which was the first globally distributed Asian high-yield deal since August. It was also the first corporate bond issue from Indonesia since the country was promoted to investment grade by Fitch and Moody's.
Berau, which engages in the exploration, development, and mining of coal in Indonesia, has mining operations across approximately 118,400 hectares in East Kalimantan. It plans to use the bond offering to raise funds to refinance its maturing debt and fund capital expenditure.
Following the recent investment upgrade by the two rating agencies, a number of Indonesian companies like Berau Coal are attempting to sell debt as borrowing costs decline.
The Jones Day team was led by capital markets partner Joseph Bauerschmidt, who was assisted by partner Sushma Jobanputra, and associates Joy Choynowska, Kevin Khan and Vinay Kurien in Singapore, and partner Joseph Lee and associate Chris Ma in Hong Kong.
“This was an excellent transaction to work on,” said Bauerschmidt in a statement. “The deal was complex, but the flawless execution of Berau’s team and the underwriters made it a huge success. The Berau team drove the deal the entire way. The fact that the offering attracted orders of more than $9.5 billion strongly suggests more Asian high-yield issuers will come to the market in the near future.”
Davis, Polk & Wardwell represented the underwriters Bank of America Merrill Lynch, Credit Suisse and JP Morgan. Some 20 local counsel were also engaged for the deal. ALB
Ranajit Dam is Southeast Asia Editor at ALB. Follow him on Twitter: @RanajitDam_ALB.
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