People Innovation Excellence

[Case Study] Debt Restructure: A Financial Turnaround of PT Sierad Produce. Tbk

Year: 2007

Case number: 107-0516-002

Case Author: Parulian Sihotang; Elies Lestari Setiawan

Course Major: Finance

Related Topics: Investment Management

Teaching Note Availability: —

Abstracts:

It was 1996, when Mr. Budiardjo Tek, the President Director of PT Sierad Produce Tbk (“Sierad Produce / Sierad / The Company”) proudly presented the Company’s achievement, “I am pleased to report that 1996, our first year as a publicly held company, proved to be a highly successful one, with outstanding financial performance recorded across the board. Net revenues for the year amounted to Rp. 454.4 billion (or equal to USD 192.3 million), income from operations totaled Rp. 44.0 billion (or equal to USD 18.6 million), and net income was Rp. 27.1 billion (or equal to USD 11.5 million). With expansion projects now coming on-stream, our poultry feed operation is growing tremendously. Expansion of our feedmill, for example, will result in a tripling of capacity and will allow us to achieve significant economies of scale.”

Not too soon after the situation changed. The Asian monetary crisis beginning in 1997 was sudden and unforeseen. It had been catastrophic for many businesses. All poultry operators – without exception and including the Company – embarked on expansion before the economic crisis in order to take advantage of the excellent prospects of the industry.

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