PT Agro Indomas gets $25m loan from foreign banks

JAKARTA (JP): PT Agro Indomas, an Indonesian-Malaysian oil palm plantation joint venture with a Central Kalimantan concession, signed a loan agreement of US$25.2 million with two foreign banks on Friday.

The loans from Rabobank International of the Netherlands and Commonwealth Development Corporation of the U.K. will finance an ongoing $40 million plantation project.

The loans would carry average interest rate of 2.5 percent per annum over the London Inter-Bank Offered Rates.

Agro Indomas has cultivated 7,000 hectares of the 12,000-hectare concession and the loan will be used to plant on the remaining area and to finance infrastructure development including roads, drainage system, housing and storage, director Syarif Bastaman said after the signing ceremony.

Agro Indomas, 70 percent owned by Shalimar Development Group of Malaysia, also plans to build a crude palm oil processing mill with production capacity of 60 metric tons per hour. Production is scheduled to start in the first quarter of year 2000.

"Our lenders, who have spent a great sum of money on the feasibility study prior to this financing venture since 1997, never thought of backing down from their initial plan," Syarif said.

"This signing comes after the lenders' long process of careful decision making, as shown by their sending agriculture experts to Argo's plantation every two weeks for some period."

The ceremony was held at Bandara Sheraton Hotel near Soekarno-Hatta International Airport.

None of the banks' representatives were willing to discuss the loan with reporters and they left Jakarta immediately after the ceremony. (02)