Archipelago announces new corporate financing facility

By Ruli Setiawan

LSX-listed Archipelago Resources Plc announced Tuesday that group companies have entered a new corporate financing facility to provide up to US$160 million in funding.

Archipelago subsidiaries have entered into a new corporate financing agreement with Standard Chartered Bank and PT Bank Permata TBK, the company said in a statement.

Under the facility agreement, Archipelago can make initial drawdowns totalling up to US$100 million. Thereafter and subject to obtaining necessary approvals, Archipelago can also exercise an option to drawdown a further US$60 million.

The company said the funds will be utilized for refinancing existing indebtedness of US$43.5 million owed to Permata and Standard Bank, and general corporate purposes should Archipelago wish to make further drawdowns in the future.

The funding supports Archipelago's strong balance sheet (with reported cash and cash equivalents of US$51 million and gearing of 5% as of 31 December 2012), while also adding significant operational and strategic flexibility by providing a further source to finance growth initiatives.

Financial close is expected to occur over the coming month on completion of various conditions precedent, the statement said.

In support of the Facility Agreement, Archipelago subsidiaries will also enter into a 5 year exclusive off-take arrangement with Standard Chartered.

"In addition to on-going support from Permata, Archipelago looks forward to building a relationship with Standard Chartered. Both banks have a track record in financing growth companies in South East Asia and evidence a strong commitment to working with Archipelago. Greater funding flexibility will support Archipelago's strong balance sheet and provides further foundation to pursue growth strategies,? Archipelago Chief Financial Officer, Colin Sutherland commented.

Editing by Reiner Simanjuntak