Healthy Performance, Danantara Will Reshuffle Krakatau Steel's Business

JAKARTA - The Danantara Investment Management Agency (BPI) plans to reshuffle the business of PT Krakatau Steel (Persero) Tbk.

This step was taken in hopes of making the state-owned steel company's financial performance healthy.

Managing Director of Stakeholder Management and Communications Danantara Rohan Hafas admitted that his party had finalized it. As a result, the company is not business efficient.

"Krakatau Steel will soon be finalized. Dismantle it, never profit, never good, never efficient," said Rohan at Wisma Danantara, Jakarta, Friday, October 31.

Rohan said that in terms of company size, Krakatau Steel is a major steel industry actor in the global arena. Moreover, it is supported by an ecosystem that supports its business. Starting from water treatment, power plants, to their own ports.

That's the deepest port in Indonesia. So a very large ship can dock. It doesn't even have it in Indonesia anywhere else," he said.

Despite having a complete operational ecosystem, continued Rohan, the company is still burdened. So the company must sacrifice part to support its activities.

"But it's been a long time, it's been a while, to cover his life being bullied, starting to sell water treatment and so on, almost lost the port," he said.

Because of this condition, continued Rohan, Danantara will reshuffle Krakatau Steel's business.

"Like that, what we see is that he has a lot of advantages that will be published, God willing," he said.

Krakatau Steel Asks For Fund Support

Previously, PT Krakatau Steel (Persero) Tbk submitted a request for financial support from the Anagata Nusantara Power Investas Management Agency (BPI Danantara) amounting to 500 million US dollars or Rp. 8.29 trillion (assuming an exchange rate of Rp. 16,586 per US dollar).

In the short term, Danantara provided a loan in the form of a Shareholder Loan (PPS) of US$250 million.

Based on the information disclosure of the Indonesia Stock Exchange (IDX), the issuer coded KRAS shares will use the USD 250 million funds for the main operational needs, including the purchase of raw materials in the form of a steel slab for HSM factories, hot rolled coils (HRC) and cold rolled coil full hard (CRC F/H) PT KBI factory, PT KPI steel pipeline HRC, and derivative steel products.

"The use of these funds adjusts the working capital needs according to the cash conversion cycle of each facility," the management wrote, quoted from the IDX's information disclosure, Friday, October 10.

Meanwhile, additional capital of up to 500 million US dollars or Rp8.29 trillion submitted to Danantara will be used for the completion or rescue of the company's restructuring after obtaining an agreement with the banking sector.

Manajemen menjelaskan pemenuhan bahan baku saat ini didukung oleh pendanaan dari pihak ke-3 (financier) dengan rate yang lebih tinggi dibandingkan dengan faslitas perbankan serta adanya batasan-batasan yang diberlakukan oleh masing- masing financier.

“Financing cost tersebut langsung menjadi tambahan biaya perolehan bahan baku,” ucapnya.

Management explained that the fulfillment of raw materials is currently supported by funding from the 3rd party (financier) with a higher rate compared to banking facilities as well as restrictions imposed by each financial player.

"The financing costs are immediately an additional cost of obtaining raw materials," he said.