Santika secures foreign loans to build new hotel

JAKARTA (JP): PT Hotel Santika Nusajaya, the property division of media giant Kompas Gramedia Group, has secured loans from a number of foreign lending institutions to construct a four-star hotel in Central Jakarta.

Kurnia Munaba, an executive at Hotel Santika Nusajaya, said the construction of the planned 12-story hotel on Jl. A.K. Sasuit Tubun, will cost US$40 million.

"We expect $27 million to come from loans and the remainder from equity," Kurnia said after the signing of loan and investment agreements between his business group and two international lending agencies.

Jacoeb Oetomo of the Kompas Gramedia Group, Antonio David of the International Finance Corporation (IFC), an affiliate of the World Bank, and Angelito Chua of the Asian Finance and Investment Corporation (AFIC), an affiliate of the Asian Development Bank, signed the agreements here yesterday.

Kurnia said that the IFC is committed to extending a loan of $14 million with a 10-year maturity, and that AFIC has offered $3 million with an eight-year maturity. He declined to reveal the interest rates of the loans, saying only that they were slightly above the London Inter-Bank Offered Rate.

He added that his company had also secured loans of $5 million each from the Nederlanse Financiering-Maatschappij Voor N.V. of the Netherlands and the Deutsche Investitions und Entwicklungsgesellschaft GmbH. of Germany. These loans have a 10- year maturity.

Charles Himawan, a legal advisor for Hotel Santika Nusajaya, noted that it was actually quite expensive for an Indonesian company to raise funds overseas.

He said that when an Indonesian firm raises funds abroad, it has to pay a number of fees, including arrangement and commitment fees, to foreign lenders. "This is simply because they don't trust our legal system and law enforcement."

"Nevertheless, raising funds overseas is currently much cheaper than raising them domestically because of high local interest rates," Charles said.

He explained that his party had negotiated for two years with the lending institutions to obtain better terms.

Speaking on the hotel project, Kurnia explained that the planned hotel, on a 11,000-square-meter plot, was currently under construction and is expected to be ready by July next year. It will have 311 rooms.

Hotel Santika Nusajaya currently owns and operates five hotels in Jakarta, Bandung in West Java, Semarang in Central Java, Yogyakarta and Bali. It also manages two hotels in Cirebon, West Java, and in Manado, North Sulawesi. (rid)