Unggul Indah get $120m in loans
SINGAPORE (JP): PT Unggul Indah Corporation (UIC), Indonesia's sole producer of alkylbenzene, yesterday secured US$120 million in loans from a syndication of 24 international banks to finance its expansion projects and debt repayment.
The loans, with maturity periods ranging from three to five years, will carry an average interest rate of 1.375 percentage points above the Singapore Inter-bank Offered Rate (SIBOR), which at present reaches around six percent per annum.
UIC president Hartono Gunawan said that the company initially applied for US$100 million from the bank syndication but the amount was raised to $120 million due to a substantial over- subscription.
"The subscription, in fact, reached $149 million but we secured only $120 million," he said after the signing of the loan commitment here.
The loan syndication was jointly arranged and underwritten by Chase Manhattan Asia Limited, the Jakarta branch of Internationale Nederlanden Bank, the Singapore branch of Japan's Long-Term Credit Bank and the Singapore branch of Japan's Mitsubishi Bank Limited.
Hartono said the new lending facility would be used to repay part of the existing loans, to finance the construction of its paraffin-convert-to-olefin (PACOL) plant and to strengthen its capital structure.
UIC, listed on the Jakarta and Surabaya stock exchanges, is Indonesia's sole manufacturer of alkylbenzene, a raw material for the production of detergent. The company, majority owned by the Sayap Mas Group, Salim Group and Lautan Luas Group, sells around 90 percent of its production on the domestic market and exports the remainder to other Southeast Asian countries.
Hartono said that the paraffin-convert-to-olefin unit, which is now under construction and scheduled for completion by the end of next year, will enable the company to use normal paraffin as a raw material to substitute the alpha olefin, which is still imported.
Costs reduction
"Besides being 30 percent cheaper than the alpha olefin, the paraffin will be more readily available, "Hartono said. "We could, therefore, significantly reduce the production costs with the operation of the PACOL unit."
He explained that UIC, which at present has a production capacity of around 150,000 tons per year, plans to build a third alkylbenzene production unit early next year to increase the annual production capacity to around 210,000 tons.
The planned third unit will enable the company to tap the rapid growth in the detergent consumption in Indonesia, he said, adding that the improvement of living standards resulting from the country's steady economic growth is expected to further raise the per capita consumption of detergent, which is now merely around three kilogram per annum.
He added that the per capita use of detergent in Indonesia is still far lower than the approximate six kilograms in Malaysia, Thailand and the Philippines.
"Hence, the Indonesian domestic market alone promises more room for growth," he said. (hen)