Smart restructures US$45m loan
JAKARTA (JP): Publicly listed integrated crude palm oil (CPO) company PT Smart Corp. has reached a two-and-a-half year refinancing agreement with 11 foreign creditors for its US$45 million syndicated loan that matures on Wednesday.
Smart's senior managing director Tan Siauw Liang said on Monday that foreign banks were "very comfortable" with the company's strong future cash flow, which was more than sufficient to fully repay the syndicate by October 2002.
"The refinancing marks another major milestone for the company. It reaffirms the high credit rating and confidence of the international banking community toward solid Indonesian companies," Tan said.
The 11 syndication banks include ABN-AMRO, Credit Industrie et Commercial, DKB, Fuji Bank, Hiroshima Bank, ING, Rabobank, Sanwa Bank, Sakura Bank, SG and Yamaguchi Bank.
Rabobank acted as financial adviser to the transaction.
Smart, a fully integrated CPO plantation and refinery operation, is a unit of Singapore-listed Golden Agri Resources, a holding company controlled by the Indonesian Sinar Mas Group.
The company's plant in Surabaya, East Java, has a production capacity of 1,400 tons of CPO per day, while the Belawan facility in North Sumatra has a production capacity of 800 tons of CPO per day.
The Surabaya facility also has a capacity to produce 600 tons of margarine per day, while Belawan's capacity is 300 tons.
Tan said that 60 percent of the Surabaya facility was used to produce branded cooking oil, while the remainder was for nonbranded cooking oil.
He said that starting this year Smart was planning to open some 10,000 hectares of new CPO plantations per year over the next three years in East Kalimantan.
"The refinery's capacity is greater than the supply of raw materials from our own plantations," he said.
Tan said that the company was well positioned to benefit from the growing global and regional demand for palm oil.
He pointed out that as of the end of December last year, the company's plantations covered approximately 88,227 hectares, of which 47,846 was already mature.
"The full 88,227 hectares will mature in three years, which will allow the company's internal CPO production to jump from 162,340 metric tons in 1999 to the company's estimated figure of over 350,000 metric tons by 2002," Tan said.
He said the benefits from the higher CPO production would be further boosted by an anticipated recovery in international CPO prices to above $400 million per metric ton.
He added that for 2000 the company estimated export sales to generate around 30 percent of its revenues.
Smart is the country's second largest cooking oil manufacturer with a 34 percent domestic market share. Its market share in 1998 was only around 29 percent.
The company reported a net profit of Rp 139 billion in 1999.
The company's net outstanding debt as of the end of 1999 was around $110 million.
Tan said the company might need more external money to help finance its expansion program.
He said the company had considered raising money through the bonds market, but had yet to decide when to launch the bonds.
The debt restructuring deal reached by Smart also marked a milestone in the restructuring effort of the country's massive $70 billion corporate sector overseas debt.
Only a handful of local companies have been able to restructure their overseas loans.
Restructuring the corporate sector debt overhang is crucial to revive foreign investor confidence in the crisis-hit economy.
The government has said that it is considering providing incentives including tax breaks to encourage debtors and creditors to immediately reach a restructuring agreement. (rei)