Gresik to get banking loan for expansion, Indonesia

Gresik to get banking loan for expansion, Indonesia
Published: 07 June 2006

PT Semen Gresik Tbk will not issue any bonds to finance the development of new facility. Instead, the company will get banking loans. The Commissioner of PT Semen Gresik Tbk Agus Tjahjana said that the banking loan will be the same as the money from the company’s reserve in a bid to secure the cash flow. 

"We are considering on whether the ratio of loan to the internal fund will be 60:40% or 70:30%, or whether there is some better option. The shareholders will take the decision," he said yesterday.  He said the company is optimistic to be able to repay the debt amid the better performance of the cement sector. The company is of the opinion that the bonds issuance is not benefiting as in some cases the interest rate is higher than that of banking loan. 

Agus said that Semen Gresik has issued some bonds after the crisis and the interest rate was 18% per annum, while the banking loan interest was 14%. 

"We have suffered from some losses as we have to pay higher yield. Therefore we think it is better to get the banking loan even though the interest rate is still around 12.5%," he said. 

Agus said that this year’s high expenditure will not harm this year’s sales revenue. Last year the company booked IDR1 trillion sales revenue.