|
Bank
Mandiri will lead a group of banks to help provide state fertilizer
maker PT Pupuk Kalimantan Timur (PKT) with the financing to build a
US$700 million plant — which will be the nation’s largest
fertilizer factory.
With some 30 percent of total financing coming from PKT’s cash
reserve, the banks will provide around $490 million in syndicated loans
for the project, Mandiri president director Agus Martowardojo said
after signing the agreement Monday.
Under the agreement, the country’s largest lender will act as the
arranger that will seek other banks to contribute further loans.
“Three to five local banks will be enough to finance this but we
also are looking for foreign banks to participate,” Agus said,
adding that Mandiri might take between a 20 and 30-percent interest in
the syndicated loans.
The loan will be 60 percent in US dollars and 40 percent in rupiah with
a maturity period of no more than 10 years and interest rates based on
market prices, Mandiri director for corporate banking Riswinandi said.
The loans are expected to be disbursed starting in the second quarter of next year.
PKT president director Hidayat Nyakman said the new plant, to be called
the Pupuk Kaltim-5 factory, will be located in Bontang and will be part
of an effort to increase Indonesia’s fertilizer production
capacity
“The new factory will have a capacity of 2,500 metric tons per
day (MTPD) of ammonia and 3,500 MTPD of urea and it will be the biggest
fertilizer factory in this country,” Hidayat said.
Urea is made from ammonia and carbon dioxide, which are both fed into a
reactor at high pressure and temperature. The urea is formed in a
two-step chemical reaction.
The tender process for plant construction is targeted to begin before
the end of this year, with the construction work scheduled for
completion within the next 36 months.
Hidayat said that the construction of Pupuk Kaltim-5 was aimed at
replacing the company’s first factory, the Pupuk Kaltim-1
project, which is now old and becoming inefficient.
“This change will cut production cost by $12 per ton of urea,” he said.
PKT now operates five urea fertilizer factories with a total capacity
of 2.98 million tons per year, the biggest producer in Indonesia. It
also operates four ammonia factories with a total capacity of 1.85
million tons per year.
According to a company statement, PKT supplies two-thirds of the country’s urea production.
In total, Indonesia needs about 10 million tons of fertilizer, with domestic companies producing about 70 percent of this.
In the first half of the year, the company’s revenue dropped by
26 percent to Rp 3.7 trillion ($373.7 million) on the back of lower
fertilizer prices, meanwhile its profits before tax stood at Rp 370
billion.
In 2008, the company booked Rp 627.8 billion in net profits, a 52 percent increase from a year earlier.
It plans to issue Rp 1.3 trillion worth of bonds in October to strengthen its capital base and
has appointed Danareksa as the underwriter.
Two types of bonds will be issued — Rp 1 trillion in conventional bonds and Rp 300 billion in sharia bonds.
Agus of Mandiri said: “The syndicated credit is expected to
provide important momentum to support the government program to
revitalize the fertilizer industry, for the sake of the country’s
food
resilience.”
The government has been trying to revitalize fertilizer companies to
boost their production and to feed the agriculture sector’s needs
for fertilizers.
The government, under its budget plan for 2009, has allocated a
fertilizer subsidy of Rp 17.5 trillion, as compared to Rp 15.17
trillion in 2008 and Rp 7.8 trillion in 2007.
This year’s funds will be used to subsidize farmers making use of 5.5 million tons of fertilizer.
|
