Nov 1, 2010

Fajar Surya secures US$120 mio loan

Industrial paper producer PT Fajar Surya Wisesa Tbk (FASW) has signed a US$120 million club deal loan on October 22 2010 with The Hongkong and Shanghai Banking Corporation Ltd (HSBC), PT UOB Buana, and Oversea-Chinese Banking Corporation Limited (OCBC).
In an official statement filed to Indonesia Stock Exchange (IDX) today, these loan facilities will be used by Fajar Surya to repay US$100 million principal amount of guaranteed senior notes maturing in October 2011. The remaining loan is available for general corporate purposes.
Fajar Surya is underway to hold construction of new paper machine facility 5 (PM 5), which is nigh completion.
PM 5 will produce corrugated medium paper with the capacity of 300,000 tons per annum and is expected to be operational by January 2011.
Adding to this, Fajar Surya also plans to modify two of its existing paper machinese, paper machine 2 (PM 2) and paper machine 7 (PM 7).
PM 2 will have 140,000 tons annually of production capacity and need US$30 million cost.
A US$40 million cost is required to establish PM 7 with 200,000 tons capacity per annum.
Both modifications are expected to take around 2 months each to complete, enabling Fajar Surya to keep up with the latest technology. This will reduce energy and raw material cost, improving the quality of its final products and increase the production capacity to keep up with growing demand.
Fajar Surya is currently in talks with Export Credit Agenciees and HSBC regarding the financing of both modifications. The proposed financing will be around US$40 million to US$54 million with an expected tenor of 10 years and interest of around 4% per annum.

Disclosure: No position at the stock mentioned above.
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