Gresik picks Mandiri to arrange 6.3 trl rupiah loan

Fri Dec 19, 2008 10:18am GMT  

JAKARTA, Dec 19 (Reuters) - Indonesia's biggest cement maker, PT Semen Gresik Tbk (SMGR.JK), said on Friday it has appointed PT Bank Mandiri Tbk (BMRI.JK) to arrange a 6.3 trillion rupiah ($576.9 million) syndicated loan to help finance the construction of new cement plants. 

Semen Gresik said it needs around $1.3 billion to build 2 cement factories - in Central Java province and South Sulawesi province - and 2 power plants in South Sulawesi to support the operation. 

"Despite current economic crisis, Semen Gresik will continue with the construction because production utilitisation has reached maximum, and we anticipate growing cement demand after the crisis," Gresik's president director, Dwi Soetjipto, said in a statement. 

The firm expected the plant in Central Java province to be completed in 2011 and the plant in South Sulawesi in 2012. Each will have a production capacity of 2.5 million tonnes a year. 

Currently, Gresik has a production capacity of 18 million tonnes a year. 

Bank Mandiri, the country's largest lender, will arrange the syndicated debt with its brokerage arm, PT Mandiri Sekuritas. The funds are expected to be ready for disbursement in the first quarter of 2009. 

"The loan will have a 10 year term. As for the interest rate, we are still looking into a number of factors such as inflation and market conditions. But it may come between the range of 12.5-15 percent," Bank Mandiri's president director, Agus Martowardojo, told reporters. 

Indonesia's cement consumption in November fell by 2.4 percent from a year earlier to 3.27 million tonnes. Still, total consumption for the year to date is up 12.6 percent from a year earlier at 34.96 million tonnes. 

Semen Gresik and its main rival PT Indocement Tunggal Prakarsa (INTP.JK) had both predicted last month that cement demand would decline in 2009 because of tougher economic conditions. 

Gresik's shareprice ended 0.63 percent higher at 4,025 rupiah on Friday, bucking a 0.26 percent fall in the broader market .JKSE, while Mandiri's shareprice finished 3.53 percent lower to 2,050 rupiah, after gaining strongly this week. ($ 1 = 10,920 rupiah) 

(Reporting by Andreas Ismar, editing by Neil Fullick)