Indonesia's Gresik may issue $1 bln bond in January

JAKARTA, Dec 10 (Reuters) - Indonesia's largest cement maker, PT Semen Gresik Tbk (SMGR.JK: Quote, Profile, Research, Stock Buzz), may issue $1 billion of bonds in January to finance the construction of new factories and supporting power plants, an official at the firm said on Monday.

The state-owned firm plans to spend up to $1.5 billion on two cement plants with an annual capacity of 2.5 million tonnes each in Sumatra and Java, as well as two power plants providing with a total capacity of 410 megawatts to support the operation.

"We are currently reviewing our financing options. It is likely that we will issue $1 billion bonds. We are hoping for it to happen as soon as possible, maybe in January," Darjoto Setyawan, the deputy chairman of the company, told Reuters.

"We have appointed JPMorgan as our financial adviser and maybe we will ask them to handle the bond issue as well," he added.

Previously, a source familiar with the deal said Gresik was planning to raise $500 million from the issue.

Gresik aims to crank up capacity by about 40 percent by 2013 to 22.9 million tonnes. Last year it had around 16 million tonnes.

Gresik estimates the country's domestic cement consumption will rise 6-7 percent in 2008, higher than a 5 percent forecast by Indonesia's Cement Association, as the sector gradually recovers from a slowdown last year.

Last year, Indonesia's cement industry was hit by high interest rates, which put a brake on the construction sector.

Gresik controls nearly half of the Indonesian market. It accounted for 14.34 million tonnes of total industry sales of 32.1 million tonnes last year. (Reporting by Nury Sybli, writing by Harry Suhartono, editing by Ed Davies)