United Tractors seeks $125m loan

United Tractors seeks $125m loan

Patricia Kuo, Bloomberg, Hong Kong

PT United Tractors, the heavy equipment unit of Indonesia's PT Astra International, hired four banks to arrange a US$125 million loan to refinance debt and to expand, a company official said.

United Tractors is taking advantage of falling loan margins to refinance debt and prepare for expansion, Tjandrawati Waas, spokeswoman of the Jakarta-based company, said in an interview. The company will use $65 million to refinance debt and the remaining $60 million to increase working capital, she said.

"We want to get a better term for our loan and increase our working capital for expansion," Waas said today. "Our business is growing."

United Tractors will pay interest of 2 percentage points more than the U.S. dollar Singapore interbank offered rate for the loan, said Waas. That's 1 percentage point less than the average loan margin the company is paying for its existing debt, she said. Three-month Sibor, a rate set daily by banks and used as a borrowing benchmark, was fixed at 3.78 percent today.

BNP Paribas SA, Oversea-Chinese Banking Corp., Standard Chartered Plc and Sumitomo Mitsui Banking Corp. are arranging the three-year loan, which is scheduled to be signed next month, Waas said.

The four arrangers are inviting other banks to join the credit by Sept. 23 for a fee of between 0.15 to 0.25 percent, said a banker involved in the credit.

United Tractors' net income rose to Rp 557.7 billion ($54 million) in the six months ended June 30, from Rp 190.7 billion in the year-earlier period. Sales rose to Rp 5.93 trillion from Rp 4.29 trillion.