16 banks to lend $690 million for Timor car project

JAKARTA (JP): A consortium of four state banks and 12 private banks decided yesterday to disburse US$650 million in 10-year loans to PT Timor Putra Nasional to carry out the national car project.

Apart from the $650 million in loans, Bank Dagang Negara (BDN), as the consortium's leader, had earlier disbursed $40 million in bridging finance to Timor Putra.

BDN's newly installed president Salahuddin Nya'Kaoy said the four state banks would provide half of the $650 million and private banks would provide the rest.

"There are no problems. We're only to finalize the legal documentation of the loans," Salahuddin told journalists after chairing a meeting with participating banks and Timor Putra at his office.

The four state banks are BDN, Bank Rakyat Indonesia (BRI), Bank Expor Impor (Exim) and Bank Tabungan Negara (BTN).

But Salahuddin declined to name the 12 private banks participating in the consortium.

"We will announce it at the right time," he said.

The disbursement of the loans to Timor Putra has been slow because the private banks asked to join the loan syndication waited for the results of a study on the Timor car project.

The government granted Timor Putra exclusive rights to manufacture a so-called "national car" last year. It is currently cooperating with South Korea's Kia Motors Corp. to produce the cars.

Fully assembled Sephia sedans -- renamed Timor -- are presently imported from South Korea because Timor Putra's production facilities are still being built.

The national car receives import duty and luxury tax exemptions, driving its cost down 60 percent over other cars in the domestic market.

Timor Putra has proposed $690 million in loans from a syndication of state and private banks to help finance the construction of its manufacturing facilities in Cikampek, West Java.

Timor Putra president Hutomo Mandala Putra said yesterday his company wanted the loans to be disbursed soon to expedite the construction of the facilities.

"We hope the agreement on the loan facility will be signed this month," Hutomo said.

Hutomo, President Soeharto's youngest son, reiterated that his company had not asked for special facilities such as soft loans for the project.

The loans would carry an annual interest rate of about 3 percent over three-month-to-six-month deposit rates and mature in 10 years, with a grace period of three years, he said.

Hutomo added that all the loans would be used to finance the project, which would cost $1.09 billion.

The facility would have a total annual production capacity of 70,000 Timor sedans and utility vehicles.

"With the two products, we are optimistic about producing and selling at least 40,000 vehicles a year," Hutomo said.

He said his company would export 300 locally assembled Timor cars a month to Malaysia starting next month. (rid)