Pertamina to own 10% stake at TPPI
Tuesday, May 15 2001 - 04:00 AM WIB
State oil and gas company Pertamina will have 10 percent stake at stalled petrochemical project in Tuban, East Java, belonging to Trans Pacific Petrochemical Indotama (TPPI) following the planned restructuring of the company's debt to revive the project, Bisnis Indonesia reported on Tuesday (May 15).
An official at the office of the junior minister for economic restructuring, Amir Sambodo, said that one of its foreign shareholders, namely Siam Cement of Thailand, had given its green light for the planned restructuring, to be spearheaded by the Indonesian Bank Restructuring Agency (IBRA).
"They (Siam Cement) have given their supports 100 percent. Now, we are seeking supports from other foreign shareholders, Itochu, Nissho Iwai and JCC Corp. I'm optimistic that they will also support the restructuring," Amir said.
Siam Cement owns 20 percent stake at TPPI, Itochu and Nissho Iwai have 5 percent stake each and JGC Corp. is the main contractor for the project. The remaining stake is owned by local shareholders led by the Tirtamas Group.
Based on the restructuring proposal from Tirtamas, approved by IBRA that has taken over all TPPI domestic debts, IBRA and PT Silakencara Tirtalestari would form the so-called newco. The newco would control 70 percent stake at TPPI, while the remaining 30 percent would be owned by foreign shareholders and creditors.
But then to resume operation, TPPI needs fresh funds to finance its operating capital and supplies of feedstocks. The total funds needed would be US$475 million. TPPI would then issue product-backed bonds to raise the needed funds.
There are two scenarios to raise the needed funds.
First scenario would involve the government and Pertamina. Pertamina would supply the feedstocks to TPPI worth US$300 million that would be converted into Pertamina's ownership of 10 percent at TPPI. Domestic banks then provide the remaining US$175 funds, of which $75 million would be used for TPPI's capital.
In the second scenario, a new company, called special purpose vehicle would be established, to facilitate swap agreement between Pertamina and TPPI. Pertamina supplies feedstock to TPPI, and in return, TPPI supplies its refined products to Pertamina. (*)