JAKARTA (TheInsiderStories) – The Bakrie Group pledged its subsidiary, PT Energi Mega Persada Tbk (IDX: ENRG) shares to obtain a loan facility from Elektra Assets Ltd., and EFA RET Management Pte. Ltd. US$88.25 million, the official said on Monday (10/14). The management expect to get approval from its shareholders on Oct. 16.
It said, the loan will be used to meet funding of Bakrie-affiliated company based in Virgin Island, Kinross International Group Ltd. Kinross is an investment company that was established based on British Virgin Island law.
While Elektra, the creditor, is a company based in Cayman Island engaged in financial services. Another creditor, EFA RET, is a Singapore-based company with a financial services business. Then, Madison Pacific Trust Limited, which is the guarantor agent in the transaction, is a Hong Kong-based company and is engaged in financial services.
“In principle is a corporate guarantee, it means the company needs to pay a fee equivalent to the amount owed that Kinross cannot pay to lenders. If the company does not have enough capability, then all assets can be used to pay off these obligations,” said the management.
Earlier, Energi Mega has planned to pay principal debt to PST Finance Ltd with total amount of $50 million. Director and CFO of the company Edoardus Ardianto, said that the energy producer will withdraw loans from Elektra Asset, in the amount of around $60 million to replace the matured loans from PST Finance, which has a two-year tenure.
With the new loan, he said, the company are able to reduce the interest cost $4 million per year, cause the 15 percent-loan interest rate from is lower than the 22-23 percent-loan interest rate from PST Finance.
Ardianto stated, that the benefits of saving interest expense will automatically be used to finance Energi Mega‘ operations. He also stressed that the debt fund from Elektra Asset will not increase the company’s debt.
Assets pledged as collateral are their shares at EMP Gerbang Limited, EMP Korinci Baru Limited, EMP Malacca Strait SA, RHI Corporation, PT Imbang Tata Alam, PT Tunas Harapan Perkasa, PT EMP Gelam, PT EMP Semberah, Energi Mega Persada Inc., and Energy Mega Persada Pte. Ltd.
Based on the company data, until the first half of last year, Energi Mega have a long-term loan $200 million, with a portion of short-term debt of $90 million. The debt was reduced until mid-November last year, where long-term debt was $170 million and short-term debt was $80 million.
This year, the company will be focused on three programs. First, to raise production from their existing assets such as increasing oil production in Malaca, gas in Bentu and Kangean, and oil in Tonga.
Second, there will be a decrease in the financial burden due to the refinancing that has been successfully carried out by the finance department, so that there is a cost savings of $4 million per year as explained earlier.
Third, before September 2019, company will hold a limited public offering which was approved by shareholders in September last year. The new funding will be used to repay loans and expand organically.
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