IFC lends $5m to local firms
JAKARTA (JP): Local mining service firm PT Dianlia Setyamukti said the World Bank's private-sector arm, International Finance Corporation (IFC), had agreed to provide it with a US$5 million loan to boost its production.
Company president Tjahyono Imawan said on Wednesday the agreement was signed last week and the loan would be disbursed later this month.
"The loan is not much, but it indicates foreign investors' confidence in our company," Tjahyono told a media briefing.
He said the loan was aimed to cover the company's expansion program worth $10 million to boost production to 2.15 million tons this year from 1.8 million tons in 2000. The remaining $5 million would be covered with the company's equity and loans from local financial institutions.
The company, which provides excavation and transportation services to mainly coal mining companies, would use the loan to buy heavy equipment, including excavators, shovels and transportation and add to its working capital, Tjahyono said.
Of the total loan, $4 million carries an interest rate of 5 percent above the London inter-bank offered rate (LIBOR) maturing in 2006, while the remaining $1 million is due in 2010 with an interest rate of 4.5 percent above LIBOR, Tjahyono said.
The company would pay the loan's installment every six months starting next year, he said, adding IFC had an option to convert the loan into shares starting 2004.
Company finance director Bimantoro Adisanyoto said the loan would enable the company to meet the growing demand in the mining industry.
Early this year, the company was awarded by its coal mining company clients contract extensions for another three to five years, but Bimantoro was reluctant to provide figures on the value of the contracts.
The company, which was established in 1991, provides full mining services to coal mining company PT Berau Coal located in East Kalimantan.
It provides transportation to carry coal produced by coal mining company PT Adaro Indonesia in South Kalimantan, where it serves as the subcontractor of Adaro's contractor PT Pamapersada Nusantara.
Aside from coal companies, the company also provides services to gold mining companies, but, the company said, gold accounts for only 10 percent of the company's operations.
Akil Abduljalil, IFC's senior executive, said IFC agreed to provide a loan to Dianlia on the grounds that the company supported the superior mining industry.
"We strongly support private sectors or firms that are export- oriented," he told The Jakarta Post.
The loan also indicated IFC's commitment to help the country recover from its economic crisis, which started in mid-1997, he added.(05)