Antam signs forex line hedging facility agreement

By Romel S. Gurky

IDX-listed mining firm PT Aneka Tambang Tbk (Antam) announced Tuesday that it has signed a Forex Line Hedging Facility Agreement with PT Bank Mandiri (Persero) Tbk, PTBank Rakyat Indonesia (Persero) Tbk (BRI) and PT Bank Negara Indonesia(Persero) Tbk (BNI).

As a natural resources based company, Antam said in a statement it endeavours to mitigate its risk exposure and potential loss. Under the agreement, Antam receives US$20 million facility from Bank Mandiri, $10 million facility from BRI and $30 million facility from BNI.

Antam's President Director, Tedy Badrujaman said,?Antam?s activities expose them to a variety of financial risks, including the effects of changes in commodity prices and foreign currency exchange rates. Our risk management program focuses on the unpredictability of financial markets and seeks to minimise unforeseen effects on the financial performance of the company. The signing of the facilities reflects our proactive attempts in corporate risk management.?

As an export oriented company, Antam?s revenue and cash position are mostly in US Dollar while most of Antam's operating expenses are in Indonesia Rupiah. As such, Antam is exposed to foreign exchange risks.

In mitigating these risks, Antam said its hedging strategy includes conducting hedging transactions through natural hedging, plain vanilla options and forward and cross currency swaps (CCS) options. Antam's hedging policy refers tothe Minister of State-owned Enterprises Regulation No. PER-09/MBU/2013 on General Policy of Hedging of State-owned Enterprises, Bank of Indonesia RegulationNo. 16/18/PBI/2014 on Hedging Transactions of Banks and Bank of IndonesiaRegulation No. 17/15/PBI/2015 on Foreign Exchange to Rupiah Transactions between Banks and Domestic Parties.

Editing by Reiner Simanjuntak