FINANCING STRATEGY TO RESOLVE FINANCIAL DISTRESS AND THE SOLUTION OF LIQUIDITY PROBLEM FOR PT. SOLUSI BANGUN INDONESIA, TBK.

• Main Author: Sebastian Johanes H, Marco
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/46530
• Institution: Institut Teknologi Bandung

PT. Solusi Bangun Indonesia, Tbk. (ticker: SMCB) is one of the famous cement manufacturers in Indonesia. With the rapidly cement export demand growth, Solusi Bangun Indonesia failed to utilize this as its current financial performance does not reflect this stature. From 2016 to 2018, this company failed to generate positive net profit. The main cause towards this issue is the increase in debt from these exact periods, resulting in interest expenses increase. Solusi Bangun Indonesia also has trouble in maintaining its liquidity, as for 5 years this company liquidity ratios are below 1.00. This might be caused by inadequate working capital planning. This project explores and analyzes option to refinance Solusi Bangun Indonesia in order to resolve the financial distress issue and working capital. Since the capital used is to debt financing and the company’s stock is underperforming in the market, therefore the financing is conducted by its parent company, Semen Indonesia (SMGR). One of the obstacle in financing by SMGR is, debt or bonds financing is not feasible, because on Q1 2019 Semen Indonesia has already released corporate bonds and its corporate rating also decreased. Therefore the most feasible option is through equity financing. After analyzing through multiple alternatives, the most feasible equity financing plan is through the combination of 51.06% Right Issue and 48.94% Preferred Stock Issue out of total capital needed. This is due to the as a SOE, SMGR must maintain a minimum of 51% equity owned by the Government of Indonesia. Another reason is, Preferred Stock is considered more marketable for investors as it has fixed dividend and the capital used is to finance a distress company.