Cement maker PT Indocement Tunggal Prakarsa said it is proposing to exit an existing master of facilities agreement (MFA) with creditors, which is regarded burdensome, by refinancing and hedging an outstanding US$380m debt.
To further ease the debt costs, the company will seek corporate guarantee from its parent HeidelbergCement AG, it said.
The existing MFA, signed with creditors including Heidelbergcement Finance BV and Japan’s Marubeni, requires Indocement to keep a sizeable cash balance, as well as excessive and unnecessary collateral value of 1.65 bln usd, even with its debt level down substantially from US$1.1bn in 2000.
Indocement also has to maintain a cash buffer of US$15.8m in its operating account, a separate US$15m in escrow/revenue account, among other requirements.
Under the MFA refinancing, Indocement will enter into syndicated and bilateral loan facilities agreements totaling not more than an equivalent of 340 mln usd, provided that the proposed HeidelbergCement AG corporate guarantee shall secure no more than an equivalent US$190m in total loan facilities, it said.
It will also use its current cash balance to repay the MFA in the amount of an equivalent US$40m.
The proposed refinancing should be approved by more than 50 per cent of independent shareholders during the shareholder meeting slated for March 29, the company added.