Not Going Bankrupt, This Is Erick Thohir's Move To Save Krakatau Steel

SOE Minister Erick Thohir (Photo: Antara)

JAKARTA - PT Krakatau Steel is predicted to go bankrupt. However, this prediction was not proven. At the end of 2021, this state-owned company actually recorded a positive performance with net profit of IDR 1.06 billion. The success of the rescue was based on a number of strategies.

SOE Minister Erick Thohir said that the rescue of PT Krakatau Steel Tbk from the threat of bankruptcy was based on a number of strategies. First, debt restructuring of IDR 31 trillion.

Erick claims that his party has succeeded in carrying out the financial restructuring and transformation program within the state-owned company. He said the company is currently entering the third phase of restructuring after going through the previous two phases.

With the restructuring, said Erick, the finances of the issuer codenamed KRAS began to improve. The reason is, the interest on the debt to the company's installments is cheap.

"When we restructure the debt in Krakatau Steel of Rp. 31 trillion, there are three steps that must be taken. With the financial restructuring of Krakatau, it is certain that there will be a lot of cheaper interest and cheaper installments. What does that mean? It's healthier," said Erick, in an interview with Inews, quoted Friday, January 7th.

Then, Erick also encouraged the initial public offering (IPO) of KRAS's subsidiary on the Indonesia Stock Exchange (IDX). The plan to list the shares will be carried out by a subsidiary in the industrial estate sector.

Furthermore, Erick explained, the process is to ensure the company's financial structure improves before its subsidiary conducts an IPO. The initial plan to go public was carried out at the end of 2021, it's just that until now the corporate action has not run.

"One of them is how a subsidiary of Krakatau Steel has to go public. The deadline this year (2021) has failed (2022)," he said. Erick is also trying to save Krakatau Steel's finances through renegotiation with a steel producer from South Korea, Pohang Steel and Iron Company. (Posco) regarding the distribution of shares in PT Krakatau Posco. He wants KRAS's share ownership in Krakatau Posco to be 50 percent, while the other 50 percent belong to Posco.

For your information, currently the composition is divided into 70 percent for Posco and 30 percent for the state-owned issuer. The negotiation process was also included in the KRAS financial and debt restructuring scheme.

In fact, Erick has also invited the President Director of Krakatau Posco Kim Kwang Moo to hold a meeting at the Ministry of SOEs in December 2021. On that occasion, Erick said the conversation was quite positive.

According to Erick, the collaboration between KRAS and Posco is able to strengthen the supply chain of the country's steel industry. In fact, it provides a business advantage between the two parties.