Various branches of the Oversea-Chinese Banking Corporation (OCBC) have granted two loans totalling IDR 2.29 trillion (€180 million; $235 million) to different Indonesian organizations responsible for the construction of the country’s 117-kilometre Cikampek-Palimanan toll road (CPTR) in Java, according to a firm statement.
Together with a consortium of private investors, including Saratoga Capital Group’s Saratoga Asia Fund III, OCBC’s mezzanine capital arm has provided an 18-year IDR 1.13 trillion convertible debt facility to PT Baskhara Utama Sedaya.
PT Baskhara Utama Sedaya is a consortium of three Indonesian companies that holds a 45 percent stake in PT Lintas Marga Sedaya, a construction company that was awarded a concession to build and operate CPTR by Indonesia’s Ministry of Public Works. PT Baskhara will use the proceeds of the convertible debt financing to fund its mezzanine loan contribution to PT Lintas, according to the statement.
OCBC has also arranged an IDR 1.16 trillion bank guarantee facility for PT Karabha Gryamandiri and PT Nusa Raya Cipta, the main contractors responsible for CPTR’s construction work, according to the statement. This loan, made in conjunction with PT Bank Central Asia and Standard Chartered Bank Jakarta Branch, will primarily be used to satisfy PT Lintas’ bank guarantee requirements related to the CPTR project.
Both loans are set at a fixed interest rate of 16 percent per annum compounded quarterly, and can be converted into underlying ordinary shares of the issuer, according to Than Su Ee, head of OCBC Bank’s mezzanine capital unit. Since OCBC is already present in Indonesia through a local subsidiary, the bank can tap into its local treasury for currency hedging instruments if necessary, he added.
Although OCBC Bank has been investing in Indonesia since 2007, this is the first toll road project in the country that it has invested in, Ee told Infrastructure Investor.
“As infrastructure development is one of the key priorities of the Indonesia government for the next couple of years, we are glad to have the opportunity to tap into this growth segment,” he said in the statement.
When completed, CPTR will be the longest toll road along the approximately 700-kilometre Trans Java Toll Road along the northern Java coast. Expected date of completion is 2015, Ee said.
The toll road requires a total investment of IDR12.56 trillion, 70 percent of which will come from Indonesian and Malaysian bank loans, and the remaining 30 percent financed by shareholder equity and mezzanine loans from PT Baskhara and PLUS Expressways International Berhad.
Other investors in the CPTR project include the International Finance Corporation (IFC), a member of the World Bank Group, which committed up to $220 million in mid-2012, according to an IFC statement. CPTR is “expected to improve efficiencies and reduce costs of transporting of goods and services between the capital Jakarta and Surabaya, Indonesia’s second largest city,” according to IFC.
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