Indocement seeks US$150m debt refinancing

PT Indocement Tunggal Prakarsa, the country’s second  largest cement maker, and part of HeidelbergCement is seeking minority shareholders’ approval for proposed  debt refinancing worth US$150m.   Indocement said in a published circular that the transaction will reduce  the debt repayment burden from April 2005 until January 2008 by more than US$35m per annum from the original annual mandatory repayment obligation  under the Master Facilities Agreement (MFA) signed by Indocement and its  creditors in 2000. Moreover, it said the repayment of the proposed refinancing transaction  will be made in one sum of its maturity date (bullet payment) while the  company reserves the right of early repayment when all of the other  facilities under the MFA have already been paid in full. Under the proposal, HeidelbergCement Finance BV (HC Finance), a  wholly-owned unit of Indocement’s parent HeidelbergCement AG, will purchase  the US$150m loan, which is a partial loan under the MFA.  HC Finance’s debt will have a tenor of four years with interest rate of  3-month LIBOR plus 180 basis points (bps).  

The transaction involves some conflict of interest because Indocement  commissioner Lorenz Naeger is a director of HC Finance BV, and Indocement is  65.14 per cent controlled by HC Indocement GmbH which is owned by HeidelbergCement  AG’s 50.33 per cent unit HC South East Asia GmbH.  The transaction therefore must be approved by more than 50 per cent of  minority shareholders at an extraordinary shareholders meeting on February  23.