Antam management divided over IKB?s export credits

Monday, August 5 2002 - 03:19 AM WIB

Although PT Antam Tbk finally agreed to obtain export credits from IKB Hermes of Germany to finance the construction of its third ferro nickel plant (FeNi III), the road to reach the decision was not as smooth as expected.

Bisnis Indonesia reported on Monday that members of the executive board were forced to vote to decide what to do with the export credits because some of them considered taking loans from the German financial institution could restrict the company?s future business growth.

According to the sources, four members of the company?s executive board, President Director D. Aditya Sumanagara, Development Director Subagyo, Operating Director Harsojo Diharjo, HRD and General Affairs Director Ismail Tangka agreed with the credit export plan, while Finance Director Ki Agus Umar Tochfa voted against the loan.

The sources said that Agus Umar voted against the export credit from the German financial institution as he considered the requirement that Antam should pay an insurance premium of about 16 percent of the total loan or about US$40.8 million would pose a major financial burden to the company?s operation.

In addition to the high premium payment, Antam is also required to place all of its earnings from the operation of the FeNi III plant (from its initial operation in 2005 to 2015) in an escrow account at a foreign bank. This requirement will certainly impede the company?s flexibility in managing its export earnings.

The export credits from IKB Hermes was one of alternatives prepared by the widely diversified mining company to finance the construction of the third ferro nickel plant. The other alternatives, called by the company?s management as a contingency plan, were to obtain loan of about US$125 million from Bank Mandiri, to issue rupiah and foreign currency denominated bonds worth US$175 million and internal funds of between US$50 million and US$60 million.

FeNi III will double Antam?s total production capacity to 26,000 per year. The plant which will be located in Pomalaa, South East Sulawesi, is scheduled to start commercial production in 2005. (*)

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