JAKARTA (TheInsiderStories) – Kinross International Group Ltd., an affiliated firm of energy producer, PT Energi Mega Persada Tbk (IDX: ENRG) plans to acquire 25 percent ownership of the Kangean Block in East Java from Japanese conglomeration firm, Mitsubishi Corporation. The planned will make the Bakrie Group’ ownership in the oil and gas block increase to 75 percent.
The unit is an investment company that was established based on British Virgin Island law. According to the director & CEO of Energi Mega, Syailendra S. Bakrie, to finance the acquisition plans, the unit has pocketed a loan of US$88.25 million from global lender.
He believed with control the block, the company could maximize the operational, increases the production and the revenues. Beside, the acquisition moves was motivated caused the Kangean Block contributed almost 50 percent of the company’ total production and revenues.
In the first quarted of this year, Energy Mega posted a net sales $79.65 million, rose 51.54 percent compared to the same period of last year worth of $52.56 million. The sales growth was supported by an increase in gas production from the Bentu Block in Riau.
Then, the gas production rose 84 percent to 184 million cubic per day, compared to previous year only 100 million cubic per day. In addition, crude oil production also increased by 6.77 percent to 2,523 barrels per day, compared to the same period last year of 2,363 barrels per day.
Bakrie also reported, the operating profit stood at $36.48 million, earnings before interest, taxes, depreciation and amortization rose up to 95.11 percent to $52.23 million. The improvement made net profit also jumped by 58.37 percent to $11.83 million, he adds.
The Kangean Block in East Java and the Bentu Block in Riau are major contributors to gas production in the company’ asset portfolio. Last year, its holding, Bakrie Group pledged the company’ shares to obtain a loan facility from Elektra Assets Ltd., EFA RET Management Pte. Ltd., and Madison Pacific Trust Ltd., with amount $88.25 million. It said, the loan will be used to meet funding of Kinross.
Elektra 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.
Energi Mega used the funds to pay principal debt from PST Finance Ltd., with total amount of $50 million. Director and CFO of Energy Mega, Edoardus Ardianto, with the new loan, 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.
He 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.
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