Krakatau Steel Asks For Additional Capital Of IDR 8.29 Trillion, Danantara Opens Voice

Danantara Chief Operating Officer (COO) Dony Oskaria. (Photo: Mery Handayani/VOI)

JAKARTA - Danantara's Chief Operating Officer (COO) Dony Oskaria opened his voice regarding the request for additional capital of IDR 8.29 trillion submitted by PT Krakatau Steel (Persero) Tbk.

Dony said Danantara would give Krakatau Steel an injection of funds for working capital.

Dony said, the fund injection assistance was part of the Krakatau Steel restructuring process.

Krakatau Steel utangnya cukup besar ya. Ini sedang kita lakukan restrukturisasi. Tahun lalu juga pabriknya kebakar ya, mungkin teman-teman tahu juga dan baru aktif kembali itu Desember tahun lalu, sehingga sudah berjalan lagi 10 bulan," katanya kepada wartawan ditulis Jumat, 10 Oktober.

Dony emphasized that this additional capital will be followed by improving management so that funds are used effectively and productively.

"We will inject equity, work capital for them, but to ensure that this working capital is effective, of course, we will also comprehensively improve the management," he said.

Furthermore, Dony said, the evaluation carried out within the steel company was not only in the management aspect, but a business model, competitive value to the company's capital needs.

"We'll see too, how they run their business so far, whoever their buyers are, what is the strength of the value proposition rather than the company. We also clean this up one by one," he said.

Previously, it was reported that PT Krakatau Steel (Persero) Tbk submitted a request for financial support from the Anagata Nusantara Daya 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.

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.

With Danantara's support, management hopes that the company can operate optimally and reduce the cost burden of raw materials that previously used financing from the 3rd (financier) party.

Berdasarkan hasil analisis perseroan, pascaadanya dukungan pembiayaan dari Danantara, KRAS diproyeksikan dapat meningkatkan EBITDA hingga 31,9 juta dolar AS.

Manajemen menilai kondisi ini menunjukkan dukungan Danantara menciptakan nilai tambah yang signifikan bagi seluruh entitas.

“Dengan terjaminnya modal kerja untuk fasilitas HSM, PTKS dapat memenuhi utang restrukturisasi Tranche A dengan kas operasional perusahaan melalui operasi bisnis fasilitas HSM,” tulis manajemen.

Based on the results of the company's analysis, after financing support from Danantara, KRAS is projected to increase EBITDA to USD 31.9 million.

Management assesses that this condition shows Danantara's support in creating significant added value for all entities.

"With the guaranteed working capital for HSM facilities, PTKS can meet Tranche A's restructuring debt with the company's operating cash through HSM facility business operations," the management wrote.