Eximbank restructures $88m loans to PT PAL

The Jakarta Post, Jakarta | Mon, 04/06/2009 8:32 PM

Indonesia’s Export Import Bank (BEI) signed a deal to restructure its troubled Rp 1 trillion (US$88 million) loan owed by ailing state shipyard company PT PAL on Monday to help keep the company afloat.

“Our loans to PAL almost reached the maximum limit of disbursed credits, or 25 percent of our total equity which stands at Rp 4.3 trillion,” BEI president director Arifin Indra said on Monday.

He said the bank would still support PAL despite their weak condition by restructuring some of their loan requirements.

“The bank is only restructuring the loans related to working capital for the construction of vessels that are still 25 percent finished,” he said.

PAL has been in financial trouble since it received a contract for the construction of 20 vessels in 2006.

As costs of ship construction soared since then, PT PAL could not cover the increased full production costs and now, the company still has 18 unfinished orders.

The unfinished projects include the building of two vessels ordered by the Navy, four escort tugs worth $6.5 million each ordered by energy company BP Plc and three 38-meter boats ordered by the customs and excise agency.

There is another order for a 50,000 dead weight ton (DWT) vessels ordered by a Turkish private company.

PT PAL also has orders from Italian companies for a tanker with a capacity of 24,000 tons and two tankers with a capacity of 6,000 tons each.