Indonesia's Bakrie Unit to Refinance Debt US$50M
Publicly listed firm, PT Energi Mega Persada Tbk (IDX: ENRG) plans to offer new share with targeting proceeds up to US$129.34 million - Photo by the Company.

JAKARTA (TheInsiderStories) – Indonesia’ oil and gas producer, PT Energi Mega Persada Tbk (IDX: ENRG), planned to pay principal debt with total amount US$50 million to PST Finance Ltd. The refinancing is expected will be completed in the first quarter (Q1) of 2019, said the official today (03/06).

Director and CFO of Energi Mega Persada Edoardus Ardianto, said that the energy producer will withdraw loans from Elektra Asset Ltd., 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 their 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.

Until the first half of last year, Energi Mega Persada’ long-term loan ranged from $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.

In 2000, Bakrie Group started to focus on oil and gas through Energi Mega Persada which is the most active in developing and exploration at upstream oil and gas sector. Energi Mage Persada started to offer its share to public in 2006.

In 2006, in a drilling location of oil well Banjar Panji -1 owned by PT Lapindo Brantas, owned by ENRG, PT Medco Energi Internasional Tbk (IDX: MEDC), and Santos Australia, hot mud spewed from the well.

An axis road from Sidoarjo to Surabaya city was damaged and the East Java economy was paralyzed. The disaster was caused by a mistake in drilling. Another rumors said that the spew of the mud was caused by 5.9 SR earthquake that shattered Jogjakarta in May 27, 2006.

The earthquake caused serious damages to Prambanan Temple, while Borobudur Temple located not far from Prambanan was only lightly damaged. Some parties were confusing on why the earthquake can make the Lapindo muds spew several meters for years. The disaster located 280 kilometers from Yogyakarta while Borobudur only located 40 kilometers.

According to Amien Widodo, a geologist and the chairman of Disaster Study Center at Surabaya Institute of Technology, the burst of mud can only happen if the earthquake has 6 Richter Scale but the effects if the earthquake that reached Porong and surrounding area were only 2.2 in Richter Scale.

Despite  that, the government had determined Lapindo mud as a national disaster and since 2007 to 2012 Indonesia government had allocated Rp 6.2 trillion ($44.28 million) to settle the issue of Lapindo mud.

Some parties opposed the decision because the disaster was caused by a fault in drilling that was supported by evidences that there was no building damaged by the earthquake in Sidoarjo.

US$1= Rp14,000
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