Barito's subsidiary to raise $750m in loan for pulp mill<\/p>\n
JAKARTA (JP): PT Tanjung Enim Lestari, a newly established
\nsubsidiary of the Barito Group, plans to raise offshore loans of
\naround US$750 million to finance the construction of a pulp mill
\nin Muara Enim, South Sumatra.<\/p>\n
Jansen Wiraatamadja, a commissioner of the Barito Group, said
\nhere yesterday that the financing will be in the form of a non-
\nrecourse financing facility, that is, a loan in which sales of
\nthe product will serve as the security for the loan.<\/p>\n
The loan facility will be arranged by Morgan Grenfell of the
\nUnited States and Marubeni Corporation of Japan.<\/p>\n
The payback period of the loan facility will be between six
\nand seven years.<\/p>\n
\"The construction of the mill, estimated to cost $1 billion,
\nwill be partly financed by the subsidiary's own equity, which is
\nexpected to reach around $300 million,\" Jansen told newsmen
\nfollowing the signing of the agreement on the establishment of
\nthe company.<\/p>\n
Barito Pacific Timber, a timber company listed on Jakarta and
\nSurabaya stock exchanges, will have a 40-percent stake in the new
\ncompany. Two local partners, PT Mukti Lestari Kencana, also a
\nsubsidiary of the Barito Group, and a company controlled by
\nPresident Soeharto's eldest daughter Siti Hardiyanti Rukmana,
\nwill also have combined shares of 40 percent. The remaining 20
\npercent will be controlled by two Japanese companies, Marubeni
\nCorporation and Nippon Paper Industries.<\/p>\n
\"The composition of foreign shareholders in the new company is
\nnot yet final as the entry of two European companies is still
\nbeing negotiated,\" Jansen said. He added that the foreign
\npartners are expected to form a consortium to represent their
\nownership in the new joint venture firm.<\/p>\n
Capacity<\/p>\n
He said that the planned pulp mill will have an annual
\nproduction capacity of 450,000 tons and it is scheduled to start
\ncommercial production in 1997.<\/p>\n
Nippon Paper will provide technical assistance in the
\nmanagement and the operation of the pulp mill for 10 years after
\ncommercial production is first begun, he said.<\/p>\n
Jansen explained that all the pulp products will be exported
\nand their marketing will be handled by Shellmark, a European
\ndistributor of pulp and paper, and Marubeni.<\/p>\n
\"Our world market share will be around six percent,\" he said.<\/p>\n
Jansen was optimistic that the prospect of the pulp market
\noverseas will be more promising in the future, due to a continued
\ndecline in the supply of pulp raw materials.<\/p>\n
\"The pulp price, which is now hovering to around $500 per ton,
\nis expected to reach around $700 per ton in 1997,\" he said.<\/p>\n
The pulp plant will be fed with materials from around 130,000
\nhectares of acacia plantations developed by the Barito Group in
\nSouth Sumatra, he said.<\/p>\n
According to Jansen, this mill will be the first Indonesian
\npulp producer whose whole supply of raw materials will come from
\ntimber estates.(hen)<\/p>",
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