Berau Coal restructures US$40 million in debt

JAKARTA (JP): Publicly listed heavy equipment distributor PT United Tractors said its coal mining subsidiary, PT Berau Coal, had signed an agreement with its creditors on the restructuring of a debt worth US$40 million.

"The event is undoubtedly the first step in realizing the debt restructuring program of United Tractors and all of its subsidiaries," the company said in a statement.

It said the agreement was signed in a ceremony last Wednesday in Singapore, attended by representatives of United Tractors and Berau Coal and the representatives of the bank consortium which provided the loan in 1996.

The consortium includes the Singapore branches of Sakura Bank Ltd., Dai Ichi Kang Yo Bank, Fuji Bank, Sanwa Bank, Nippon Credit and the Tokyo branch of Bank of Taiwan.

Berau Coal had been involved in talks with the creditors since October 1998 to restructure the loan which expires in 2001.

The loan had been used by Berau Coal to build facilities and infrastructure at its coal mines in Lati and Binungan in Kalimantan.

Under the agreement, the repayment of the loan will be extended to 2004, but Berau Coal will pay the interest on the loans every three months and the loan's principal every six months.

Berau Coal also agreed to delay the repayment of its debt owed to shareholders until it paid back all its debts to the creditors.

Berau Coal president Jeffrey Mulyono said both the company's management and the creditors were optimistic about the company's ability to settle the debt, citing that the confidence of investors in Indonesia had returned in tandem with the improvement in the country's social, political and economic status.

"The creditors believe that the debt restructuring is necessary given that Berau Coal has performed well. But the economic crisis has led to a decrease in coal prices, thus making the company need more time to recover from the crisis," Jeffrey said.

He projected coal prices to pick up in the second half of the year in line with the improvement in the market's demand and the economic recovery.

Berau Coal expected to increase its coal output to 4 million tons this year, from 3.3 million tons last year. The output was expected to further increase to 5 million tons in 2001.

Aside from the domestic market, the company sells its products to export markets including Thailand, Japan, Chile, Taiwan and other European and Asian countries.

Mulyono said the company planned to open a new mine in Sambarata, also in Kalimantan, which is believed to contain high quality coal.

Mulyono also said the company was currently conducting corporate restructuring to make it a more efficient organization.

The company has been implementing community development programs to promote the welfare of the villagers living around its coal mines and to raise their sense of belonging towards the company. (jsk)