ICBC Indonesia contributes $65 million to $470 million syndicated loan for Krakatau Steel’s Blast Furnace Project (Linked to Record ID#105183, #105184, and #105185)

Project narrative

On May 15, 2012, PT Krakatau Steel (Persero) Tbk — an Indonesian state-owned enterprise — signed a syndicated investment credit facility with Bank Mandiri, BNI, BRI, OCBC NISP, ICBC Indonesia, CIMB Niaga, and Indonesia Eximbank for a Blast Furnace Project. The loan was provided through two tranches: a $250 million tranche (“Tranche A”) from Bank Mandiri (40%), BNI (40%) and BRI (20%); and a $220 million tranche (“Tranche B”) from OCBC NISP (31.82%), ICBC Indonesia (29.55%), CIMB Niaga (27.27%), Indonesia Eximbank (11.36%). ICBC Indonesia, a subsidiary of the Industrial and Commercial Bank of China (ICBC), contributed approximately $65.01 million of working capital (or 29.55% of $220,000,000) as captured by Record ID#66187. On June 27, 2016, Treaty Amendment and Restatement of Credit Agreement No. 200 was signed, adding Tranche B to the original loan agreement from May 15, 2012 (which only included Tranche A). There were additional amendments to the Credit Agreement on February 22, 2018, and August 21, 2018. Based on the second amendment dated August 21, 2018, the loan will be repaid semi-annually in 20 installments, starting from, at the latest, February 23, 2019. Tranche B bears annual interest at 5.75%. As of December 31, 2018, and 2017, the outstanding payables of Tranche A amounted to $131,292 and $140,620, respectively. Meanwhile, the outstanding payables of Tranche B amounted to $154,234 and US$153,948, respectively. On September 30, 2019, PT Krakatau Steel (Persero) Tbk and its subsidiaries PT Meratus Jaya Iron & Steel (PT MJIS) (66% majority ownership), PT Krakatau Baja Konstruksi (PT KBK) (wholly-owned subsidiary), PT Krakatau Pipe Industries (PT KPI) (99.498% owned by PT KBK), and PT Krakatau Engineering (PT KE) signed an Addendum and Restatement Agreement for Restructuring Purposes with Bank Mandiri, BNI, BRI, PT Bank ICBC Indonesia (ICBC), Indonesia Eximbank, and BCA for all the existing outstanding loans, which was then notarized on September 30, 2019. In December 2019 and January 2020, PT Bank DBS Indonesia, OCBC NISP, PT Bank CIMB Niaga Tbk, and Standard Chartered Bank signed accession documents to the loan restructuring agreement. This loan restructuring agreement has changed several terms from previous loan agreements with its creditors such as changes in the maturity date of loans, interest rates and payment schedules of loan principal and interests. These loans were divided into three tranches which consist of Tranche A, Tranche B and Tranche C. This agreement regulated the payment schedule of loan principal and interest payments until 2021 and 2022 for Tranche B and until 2027 for Tranche A and in 2026 and 2027 for Tranche C with several forms of the agreed payment schedule and also including the divestment plan of several subsidiaries and associates for the loan settlements. All the loans would bear an interest rate at 4% per annum for US Dollar currency loans and Euro currency loans and 6% per annum for Rupiah currency loans. Part of the interest on this loan was deferred in accordance with the agreed payment schedule and due in 2027. The loan was secured by (i.e collateralized against) the fiduciary transfer of all bank accounts, trade receivables, inventories, and certain fixed assets of PT Krakatau Steel (Persero) Tbk and the unsustained subsidiaries which were assigned on a fiduciary basis in accordance with the initial loan agreements between the Company and the unsustained subsidiaries and each creditors. Record ID#105183 captures this debt restructuring. On October 26, 2020, loan restructuring agreement was amended, with a change in the payment schedule of a portion of loan principal for Tranche B which was due on September 30, 2021 extended to September 30, 2022. Tranche B loan amounted to IDR 6,248,368 (equivalent to US$400,742) and US$100,960 was due on September 30, 2022. Record ID#105184 captures this debt restructuring. Then, on December 28, 2022, PT Krakatau Steel and its unsustained subsidiaries signed the amendment of loan restructuring agreement with ten lenders, whereas the maturity date changed from September 30, 2022 to December 31, 2023 for Tranche B. Record ID#105185 captures this debt restructuring. The purpose of the project was to construct a new blast furnace complex — consisting of a Blast Furnace, Sintering Plant, Coke Oven Plant, Pig Iron Caster, Stockyard and Material/Hot Metal Handling — at the Krakatau Steel Plant in the city of Cilegon within Banten Province. Upon completion, it was envisaged that the project would be capable of producing 1,200,000 metric tons per year of hot metal and pig iron. MCC-CERI Consortium and PT Krakatau Engineering (a wholly-owned subsidiary of PT Krakatau Steel) were jointly responsible for implementation. The project commenced on September 8, 2013. By the end of 2018, the project had achieved a physical progress rate of 99.73%, and the project was completed in 2019 according to Krakatau Steel. Since then, the project was deactivated due to being inefficient. A three stage reactivation plan was initiated in October 2022, which will be carried out as a collaborative effort between Krakatau Steel and Baowu Zhongnan Co. Ltd.