CA asks banks for debt moratorium

CA asks banks for debt moratorium

TOKYO (Nikkei): PT Chandra Asri Petrochemical Center has asked banks for a three-year moratorium on repayments of a US$830 million loan, the Nihon Keizai Shimbun Saturday morning edition reported, citing sources at the Japanese companies.

The banking syndicate is expected to accept the request and is likely to reach final agreement with the venture by the end of this month.

The moratorium would run from this month, suspending $300 million to $400 million worth of payments due over the next three years.

Chandra Asri is an Indonesian joint venture between Marubeni Corp, Showa Denko KK and Indonesian partners, including PT Bimantara Citra and PT Barito Pacific Timber.

Chandra Asri, the only ethylene production base in Indonesia, was set up with the backing of an investment firm established by Japanese participants.

Lenders include the Export-Import Bank of Japan, Bank of Tokyo-Mitsubishi and Fuji Bank. A team of Indonesian partners borrowed from five Indonesian state banks.

The two groups are negotiating separately with each lender group to postpone the completion of repayment to 2009 from the originally scheduled 2006.

The US$1.88 billion venture has been producing 510,000 tons of ethylene and 300,000 tons of polyethylene a year since 1995.

The venture initially expected to begin turning a profit in 1997. But it racked up a loss of $84 million last year under the weight of a huge amount of interest-bearing debts and slumping demand for petrochemical products in Indonesia.

Marubeni has loans and investments totaling about 80 billion yen to the project to date.