BNI, BCA approve Indosat's merger plan
BNI, BCA approve Indosat's merger plan
Rendi A. Witular, The Jakarta Post, Jakarta
The country's second largest telecommunications company PT
Indonesian Satellite Corporation (Indosat) has secured approval
from two of its major creditors, Bank BNI and Bank BCA, for a
plan to merge its two telecoms subsidiaries this year.
Indosat president Widya Purnama said in a press statement on
Tuesday that the approval from the two banks was crucial to
gaining the support of other creditors.
The other creditors include Bank Mandiri, Bank Syariah
Mandiri, Bank Danamon, Bank Niaga, Bank BRI, Bank Bukopin,
Commerzbank AG, Alcatel CIT, PT Alcatel Enkomindo and Bank
Paribas-BBD.
Indosat obtained dollar-denominated loans from BNI worth US$75
million and BCA worth $40 million last year. The loans will
mature in 2007. BNI and BCA are respectively the country's second
and third largest banks.
The publicly-listed telecommunications company has planned to
merge two cellular subsidiaries, PT Satellite Palapa Indonesia
(Satelindo) and PT Indosat Mobile Multi Media (IM3), and
integrate them as a division of the company instead of separate
subsidiaries.
The move will allow Indosat to consolidate the debts of the
two units and help the company develop its cellular business.
The merger plan is slated to be concluded in October or
November this year.
Indosat's overall debt, including the debts owed by its units,
currently amounts to around $900 million in the form of short-
term bonds and bank loans. This huge debt burden is mainly a
result of the Satelindo acquisition.
The huge debt burden has hampered Satelindo's investment
program, as under an agreement with existing creditors, the
company is restricted to a maximum yearly capital expenditure of
$50 million.
The restriction has impeded Satelindo's efforts to catch up
with its arch rival, PT Telekomunikasi Selular Indonesia
(Telkomsel), the cellular unit of Indonesia's largest
telecommunications company, PT Telkom.
To help settle Satelindo's debts, Indosat has offered bonds
worth Rp 1.75 trillion ($208 million).
Proceeds from the bond issue will be used to refinance
Satelindo's debts, totaling $360 million in short-term bonds and
bank loans.
The issue would, in effect, extend Satelindo's debt tenor and
reduce its exposure to foreign currency fluctuations.