China Construction Bank contributes to a $390.6 million USD syndicated loan to PT Perkebunan Nusantara III for unspecified purposes

Project narrative

In 2019, a syndicate of 18 lenders — including China Construction Bank Indonesia (CCB) — entered into $390.6 million USD syndicated loan agreement with PT Perkebunan Nusantara III (PTPN III) — an Indonesian state-owned palm oil producer and holding company for 13 entities in the plantation sector — for unspecified purposes. This loan carried a maturity period of two years, had an amortizing repayment profile, an average life of 1.65 years. In addition to CCB, the following lenders contributed to the loan syndicate: Sumitomo Mitsui Banking Corporation (SMBC), Aozora Asia Pacific Finance, Bank of East Asia, Bank of the Philippine Islands, Chang Hwa Commercial Bank, CTBC Bank, E. Sun Commercial Bank, Eastspring Investments, Hua Nan Commercial Bank (HNCB), Hyakugo Bank, IBJ Leasing (now Mizuho Leasing Company), KB Kookmin Bank, KEB Hana, Korea Development Bank (KDB Bank), Shinhan Indonesia, Shanghai Commercial and Savings Bank (SCSB), and Taiwan Shin Kong Commercial Bank. SMBC served as the lead bank. The loan was oversubscribed from its initial $200 million USD target during syndication, which saw 17 lenders join in. During the COVID-19 pandemic, PTPN III sought to delay payments on this loan. By early May 2020, it sent out waiver requests to defer repayment on the principal and interest payments, citing projected declines in its 2020 revenue due to the COVID-19 pandemic and expected difficulties meeting other debt obligations late in 2020. It had $3 million USD of interest payment due in May 2020 and had a scheduled principal repayment due in June 2020. Lenders were expected to reject this request, arguing that the borrower had enough cash to make the payments, citing an IDR 4 trillion ($296 million USD) cash injection in PTPN III from the Government of Indonesia.