Barito's subsidiary to raise $750m in loan for pulp mill
Barito's subsidiary to raise $750m in loan for pulp mill
JAKARTA (JP): PT Tanjung Enim Lestari, a newly established
subsidiary of the Barito Group, plans to raise offshore loans of
around US$750 million to finance the construction of a pulp mill
in Muara Enim, South Sumatra.
Jansen Wiraatamadja, a commissioner of the Barito Group, said
here yesterday that the financing will be in the form of a non-
recourse financing facility, that is, a loan in which sales of
the product will serve as the security for the loan.
The loan facility will be arranged by Morgan Grenfell of the
United States and Marubeni Corporation of Japan.
The payback period of the loan facility will be between six
and seven years.
"The construction of the mill, estimated to cost $1 billion,
will be partly financed by the subsidiary's own equity, which is
expected to reach around $300 million," Jansen told newsmen
following the signing of the agreement on the establishment of
the company.
Barito Pacific Timber, a timber company listed on Jakarta and
Surabaya stock exchanges, will have a 40-percent stake in the new
company. Two local partners, PT Mukti Lestari Kencana, also a
subsidiary of the Barito Group, and a company controlled by
President Soeharto's eldest daughter Siti Hardiyanti Rukmana,
will also have combined shares of 40 percent. The remaining 20
percent will be controlled by two Japanese companies, Marubeni
Corporation and Nippon Paper Industries.
"The composition of foreign shareholders in the new company is
not yet final as the entry of two European companies is still
being negotiated," Jansen said. He added that the foreign
partners are expected to form a consortium to represent their
ownership in the new joint venture firm.
Capacity
He said that the planned pulp mill will have an annual
production capacity of 450,000 tons and it is scheduled to start
commercial production in 1997.
Nippon Paper will provide technical assistance in the
management and the operation of the pulp mill for 10 years after
commercial production is first begun, he said.
Jansen explained that all the pulp products will be exported
and their marketing will be handled by Shellmark, a European
distributor of pulp and paper, and Marubeni.
"Our world market share will be around six percent," he said.
Jansen was optimistic that the prospect of the pulp market
overseas will be more promising in the future, due to a continued
decline in the supply of pulp raw materials.
"The pulp price, which is now hovering to around $500 per ton,
is expected to reach around $700 per ton in 1997," he said.
The pulp plant will be fed with materials from around 130,000
hectares of acacia plantations developed by the Barito Group in
South Sumatra, he said.
According to Jansen, this mill will be the first Indonesian
pulp producer whose whole supply of raw materials will come from
timber estates.(hen)