Freeport wants to put assets as collateral to get a $5 billion loan

The management of gold and copper producer PT Freeport Indonesia may ask its shareholders during forthcoming extraordinary shareholders meeting to approve its plan to put the company’s assets as collateral in order to get a massive US$5 billion loan, Investor Indonesia and Bisnis Indonesia newspapers reported on Wednesday quoting a source from the government as saying.

“Freeport will seek shareholders’ approval for its plan to put its assets as collateral during an extraordinary shareholders meeting, which is scheduled for January 21, 2004, the source said in Jakarta.

The source did not reveal the name of the bank or financial institution from where Freeport wanted to borrow.

But when contacted by Petromindo.com, Freeport Indonesia senior communications manager Siddharta Moersjid denied the report, saying that the company had no plans to seek for a new loan facility, but aknowledged the management of the company was seeking for shareholders approval to amend existing credit agreement (this plan was also reported by the two newspapers). He did not provide more details.

The newspapers also said that during the shareholders meeting, it is expected that Freeport will appoint a new director.

Currently, New Orleans-based Freeport-McMoran Copper & Gold Inc. has 81.28 percent stake in Freeport Indonesia. The other shareholders are Indonesian government (9.36 percent) and PT Indocopper Investama (9.36 percent), a subsidiary of Freeport Indonesia.

Freeport has not yet hold its annual shareholders’ meeting for the year 2002. The above source said the management has yet to get the government’s approval for the merger of PT Indocopper Investama with the parent company Freeport McMoran. That’s why they have not called for the annual shareholders meeting so far.

“The main reason for the merger will be to cut the huge operational and administrative costs, the source added.(*)