Medco gets $285m loan for cement project

JAKARTA (JP): PT Semen Gombong, a subsidiary of the Medco group, plans to borrow around US$285 million to build a cement plant in Gombong, Central Java, chairman Arifin Panigoro said here yesterday.

Mr Panigoro said two syndicates of local and foreign banks would provide loans for the US$423 million plant.

Semen Gombong yesterday signed an agreement for Rp 334 billion or around $US 135 million, of the total loan with a syndication of five state-owned banks,including Bank Bumi Daya (BBD), Bank Negara Indonesia (BNI), Bank Pembangunan Indonesia (Bapindo), Bank Ekspor Impor Indonesia (Exim) and Bank Dagang Negara (BDN).

Mr Panigoro said the loan facilities had been arranged by BBD and BNI.

Semen Gombong president Hitler Singawinata said the 8.5 year- term loan carries an interest rate of 19 percent a year with a four-year grace period.

The other $155 million loan would be in the form of export credit facilities and is to be signed next month.

Hitler said the export credit facilities are to be provided by a syndication of four foreign banks -- Bank Paribas Frankfurt, Bayerische Vereinbank, Vereinsbank Hamburg and BMP.

Yesterday, Semen Gombong also signed an agreement with Bank PDFCI for a $45 million standby letter of credit which was a prerequisite to obtain the $155 million export credit facilities.

"Aside from the loans, the project will be financed with Rp 377 billion of equity or about 35 percent of the total project value," Hitler said after the ceremony to sign the syndicated loan and standby letter of credit.

Hitler said the Gombong cement factory was scheduled to commence operations in 1999 with a capacity of 1.9 tons a year.

The factory is located in Gombong, Kebumen regency, which the company claims is rich in limestone and clay deposits, the raw materials for making cement.

Hitler said Medco had been granted a mining concession of over 800 hectares in Gombong with limestone and clay reserves of around 390 million tons and 80.3 million tons.

Two hundred and seventy nine hectares of the concession zone cannot be legally mined due to its status as protected forest area.

"Still, the rest of our concession area has enough deposits for our cement factory for 60 years," said Hitler.

A consortium consisting of Krupp Polysius AG, Dickerhoff and Wydman AG and state-owned PT Rekayasa Industry will carry out construction and design.

Krupp-Fordertechnick and Haver & Boecher have made essential pieces of equipment including crushers and packers.

"The cement project is part of Medco's strategy to diversify its business," said Arifin. The company currently focuses on oil- related ventures.

Arifin said Semen Gombong had signed an agreement with state- owned PT Semen Gresik to sell Semen Gombong's products under the Semen Gresik brand for the first four years

"If we directly market our products with our own brands, it might not sell," said Arifin.

Arifin said Medco will concentrate marketing efforts on the south coast of Java, since the north coast of Java is controlled by other cement producers. (jsk)