Unggul Indah get $120m in loans
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)