The new loan has a tenor of 5 years, with an option to extend for another 2 years, making the all inclusive tenor of 7 years. From the loan proceeds, $100 million (with a greenshoe option for additional $50 million available to the syndicate of lenders based on demand) will be used to finance capital expenditures, $120 million will be used to refinance existing syndicated loans in full, and the remaining $20 million will be used for general purposes.
Hadi Rebowo Ongkowidjojo, Finance Director of FajarPaper, commented: “The signing of this long term loan facility is a testament to the strong reputation our company has built among the banking community. It underscores the confidence that our bankers have in our track record.” He added, “This expansion will strengthen Company’s competitiveness to meet growing customer demand for packaging paper.
The new expansion plan is to construct a new paper machine (PM#8) at a greenfield site, in the vicinity of Surabaya, East Java province. The total project cost is estimated at $165 million, expected to be completed by early 2016, and will add 350,000 tonnes/year, a 30% increase of containerboard production, thereby increasing the company’s total production capacity to 1,55 million tonnes/year.
