BNI, BCA approve Indosat's merger plan<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The country's second largest telecommunications company PT
\nIndonesian Satellite Corporation (Indosat) has secured approval
\nfrom two of its major creditors, Bank BNI and Bank BCA, for a
\nplan to merge its two telecoms subsidiaries this year.<\/p>\n
Indosat president Widya Purnama said in a press statement on
\nTuesday that the approval from the two banks was crucial to
\ngaining the support of other creditors.<\/p>\n
The other creditors include Bank Mandiri, Bank Syariah
\nMandiri, Bank Danamon, Bank Niaga, Bank BRI, Bank Bukopin,
\nCommerzbank AG, Alcatel CIT, PT Alcatel Enkomindo and Bank
\nParibas-BBD.<\/p>\n
Indosat obtained dollar-denominated loans from BNI worth US$75
\nmillion and BCA worth $40 million last year. The loans will
\nmature in 2007. BNI and BCA are respectively the country's second
\nand third largest banks.<\/p>\n
The publicly-listed telecommunications company has planned to
\nmerge two cellular subsidiaries, PT Satellite Palapa Indonesia
\n(Satelindo) and PT Indosat Mobile Multi Media (IM3), and
\nintegrate them as a division of the company instead of separate
\nsubsidiaries.<\/p>\n
The move will allow Indosat to consolidate the debts of the
\ntwo units and help the company develop its cellular business.<\/p>\n
The merger plan is slated to be concluded in October or
\nNovember this year.<\/p>\n
Indosat's overall debt, including the debts owed by its units,
\ncurrently amounts to around $900 million in the form of short-
\nterm bonds and bank loans. This huge debt burden is mainly a
\nresult of the Satelindo acquisition.<\/p>\n
The huge debt burden has hampered Satelindo's investment
\nprogram, as under an agreement with existing creditors, the
\ncompany is restricted to a maximum yearly capital expenditure of
\n$50 million.<\/p>\n
The restriction has impeded Satelindo's efforts to catch up
\nwith its arch rival, PT Telekomunikasi Selular Indonesia
\n(Telkomsel), the cellular unit of Indonesia's largest
\ntelecommunications company, PT Telkom.<\/p>\n
To help settle Satelindo's debts, Indosat has offered bonds
\nworth Rp 1.75 trillion ($208 million).<\/p>\n
Proceeds from the bond issue will be used to refinance
\nSatelindo's debts, totaling $360 million in short-term bonds and
\nbank loans.<\/p>\n
The issue would, in effect, extend Satelindo's debt tenor and
\nreduce its exposure to foreign currency fluctuations.<\/p>",
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"sponsor": "Okusi Associates",
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