October 11, 2010

SJS Markets Credit Research

Dominic Soon
Credit Analyst

+852 2868 9920

PT Arpeni Pratama Ocean Line Tbk
dsoon@sjs-group.com
www.sjs-group.com Recommendation: BUY
Bloomberg: SJSG

Exhibit 1: Arpeni Pratama Capitalisation Structure Upgrading to BUY on News of Potential Capital Injection
LTM Period 31 March 2010 In IDR bn We are upgrading our recommendation on Arpeni Pratama to a BUY from SELL
following a company announcement dated 8 October filed on the Indonesian Stock
Sales 1,647.1
Exchange (IDX) stating that Arpeni has identified an investor that is willing to
EBITDA 386.3
subscribe to new equity and a convertible bond issue.
EBITDA Margin 23.5%
Following an eight week due diligence process by the Investor, it may be possible
Bank O/D and RCF 583.2 for the restructuring process to be completed by end November to early December.
LT Bank debt 1,818.0 This may increase the likelihood that coupon on the APOLIJ’13 bonds due 3
Bank debt 2,401.2 November 2010 could be paid within the 30 days grace period.
APOLIJ MTN (Sukuk) 150.0
IDR APOLIJ 12% 03/13 276.0 Risk of Less Favourable Restructuring Significantly Reduced
IDR APOLIJ 12.5% 03/15 324.0 The risk of a less favourable restructuring for APOLIJ’13 bondholders is significantly
Subtotal IDR bonds 3,151.2 reduced if the convertible bond and equity issuance is completed. The equity and
USD APOLIJ 8.75% 05/13 1,283.8 convertible bonds forms part of the company’s proposed restructuring plan outlined
in July 2010. Per the original plan, APOLIJ’13 maturity will be termed out to June
Subtotal USD bonds 4,435.0
2020 and coupon reduced to 4.75% p.a. The bond will be amortising in 24 quarterly
Related party debt 42.7
installments.
Amortised costs (42.4)
Total debt 4,435.4 Details of the Capital Injection
(-) Cash and equivalents (123.0) Per the statement filed with the IDX, Arpeni announced that it has signed a Term
Net debt 4,312.4 Sheet Agreement with an unnamed Investor, in which the Investor agrees to
subscribe to USD 60mn five year interest bearing convertible bonds to be issued by
Arpeni and at least 35% of the USD 70mn in new shares to be issued by the
Equity market cap & MI 366.0
company in conjunction with the convertible bond issuance.
Enterprise value 4,678.4
Per the Term Sheet Agreement, the Investor has the exclusive rights to conduct due
Bank debt / EBITDA 6.2x diligence on Arpeni for the eight week period following the signing of the Term Sheet
IDR bond debt / EBITDA 8.2x Agreement on 4 October 2010.
USD bond debt / EBITDA 11.5x
Total debt / EBITDA 11.5x We believe that the remaining USD 45.5mn of equity will be subscribed by other
EV / EBITDA 12.1x investors.
Source: Company and SJS Markets
However, the completion of the capital injection is subject to the following conditions:
• Approval from shareholders and bank lenders;
• Approval from the IDX; and
• Agreement from creditors for the repurchase of certain debt obligations of
the company.

Key Risks
• The capital injection is not necessarily a done deal as the Investor has yet
to complete its due diligence process;
• The restructuring plan will need approval from Arpeni’s multitude of bank
lenders who may not agree on terms; and
• A lawsuit has been filed by Korean Securities Corp. claiming that it is owed
USD 2.2mn by Arpeni. Similarly, other trade creditors could file claims
against the company.

BOND DETAILS

Issue Maturity Coupon Size Ratings Yield Z-spread Recommend.

(mo., yr) (%) (USD mn) (S&P/Moody’s) Price (%) (bp)

APOLIJ May 2013 8.75% 140.9 C/NR 46 47.3% 4,669 BUY

See the back of the document for important disclosures

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DISCLAMER & DISCLOSURES

The author of this report receives compensation based, among other factors, on profits of SJS Markets Limited,
which are partially derived from investment banking activities related to financial instruments covered in the
report.

This report is for information purposes only and is not an offer or solicitation for the purchase of sale of any
financial instrument, nor a confirmation of terms of any instrument or transaction. The information is obtained
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RATING KEYS

BUY: reflects our opinion that the respective security(ies) is(are) underpriced and/or the risk/rewards trade off is
compelling; upside potential outweigh downside risk. HOLD: reflects our opinion that that the respective
security(ies) is(are) fairly priced and/or potential upsides and downside risks is mostly balanced. SELL: reflects
our opinion that the respective security(ies) is(are) overpriced and/or risk/reward trade off is not compelling;
downside risks outweigh upside potential.

SOURCES

The source for all data and market prices is Bloomberg.

© 2010 SJS Markets Limited, member of SJ Seymour Group.

See the back of the document for important disclosures

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