Jumbo Funds Immediately Flow To Krakatau Steel, Danantara Finalizes Capital Injection

JAKARTA - The operational holding of Danantara Indonesia, PT Danantara Asset Management (Persero), has ensured that the plan to inject capital into PT Krakatau Steel (Persero) Tbk has entered its final stage and will be realized in the near future.

BPI Managing Director of Operations Holding Danantara Febriany Eddy revealed that the finalization process is being completed. However, the amount of working capital to be given is still calculated in detail.

"In the near future this is the final stage. So, we will provide working capital for the steel core operation," said Febriany at the Danantara Tower, Jakarta, Friday, November 14.

Febriany said that although Krakatau Steel's financial condition has not fully recovered, the company has a number of strategic advantages that deserve to be pushed back to be competitive.

Furthermore, said Febriany, Krakatau Steel also has great potential because it is located near toll access, train lines, and deep sea ports with a carrying capacity of 200,000 deadweight tonsnage (DWT).

"All the factors that make this location strategic are already available. Now, industrial areas will be more optimal if the tenants are right. So, we want to revive and revive Krakatau Steel," he said.

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.