Antam to issue bonds to finance new smelting plant

State owned general mining company PT Aneka Tambang plans to issue bonds instead of obtaining loans from German financier IKB Hermes as earlier planned to finance the construction of its third refinery plant, Bisnis Indonesia reported on Monday.

Sources told the daily that the company expected to raise between Rp 600 billion (US$=Rp8,700) and Rp 800 billion from the issuance of the bonds. "The value of the bonds will depend on the need," one of the sources said, adding that the underwriter and guarantor of the bond issuance will be announced on Tuesday.

The company would switch to the bond issuance rather than obtaining loans from the German financial institution in financing the construction of the company?s third plant. If the company raises loans from IKB Hermes, it will further increase its foreign debt burden while its foreign exchange earning has showed a significant increase.

The company?s corporate secretary Dohar Siregar neither confirmed nor denied the plan. He said that issuing bonds was one of alternatives to be taken to raise funds to finance the construction of the new plant.

In the general shareholders meeting on June 19, the management was authorized to either issue bonds or obtain loans from IKB Hermes in financing the new plant. "The final decision will be made by the end of this month," Dohar said.

Antam earlier said it would surrender its three ferro nickel processing plants ? FeNi I, FeNi II and the planned FeNi III -- as collateral for the debts worth US$360 million to be obtained from Germany?s IKB Hermes.

The tender for the construction of the new plant was in fact won by Japanese firm Mitsui, but the company later pulled out from the project after it failed to obtain financial support. The Japanese position was then replaced by German?s Tessag which had successfully obtained a financial backup from IKB Hermes. (*)