Tuban Petro Gets Some Loans from Sumitomo

PT Tuban Petrochemical Industries (Tuban Petro) has secured US$250 million loan commitment from Sumitomo Mitsui Banking Corporation (SMBC) and Vittol of Singapore.

The President Director of the State Assets Management Corporation (PPA) Muhammad Syahrial said Vittol will provide US$150 million and SMBC will provide US$100 million.

"If they can conclude the negotiation soon, the loan agreement will be signed soon as well," he said to me last week.

Tuban Petro's Commissioner Amir Sambodo confirmed the company assigned SMBC to arrange some loan for the company. "We are still negotiating on this. We hope to conclude the scheme soon."

He said the loan from Vittol will be repaid with Tuban Petro's products. "Vitoll's financing will be off-taker with Tuban Petro's products like paraxelene and toluene." He said with such scheme Vittol also has secured the supply of some product.

He said Tuban is waiting for SMBC's offering on the repayment price. "This is working capital loan of one year. We are waiting for SMBC's offering. They have the mandate to get the loan."
He added United Overseas Bank of Singapore also will take part in getting financing for Tuban Petro. He added that the financing commitment for Tuban Petro can reach US$350 million.
Initially PPA looked for US$400 million of working capital loan for upstream petrochemical industry in Tuban of East Java. In this regard, PPA negotiated with BNP Paribas and UOB of Singapore, but BNP Paribas cancelled the plan to provide the loan.

PPA has assigned PT Beburinas Nusantara to become assessment consultant for Tuban Metro. The project's assessment should have been ready this year. Tuban Petro has 59.5% shares at Trans Pacific Petrochemical Indotama (TPPI) and 80% shares at Polytama Propindo. Apart from PPA, the shareholders are Itochu Corporation (4.25%), Tuban Petrochemicals Pte Ltd (unit of Siam Cement PCL, 17%), Sojitz Corporation (4.25%) and Pertamina (15%).

PPA has stocks and credit assets at Tuban Petro in Multi Years Bonds of IDR3.266 trillion and Mandatory Convertible Bond (MCB) of IDR4.167 trillion following the restructuring of Tirtamas Majutama.

The MCB reflects the ownership of 21%-25% at TPPI. TPPI produces aromatics like paraxylene, benzene, toluene, orthoxylene as much as 1,065,000 tons per annum. TPPI also produce combustion oil as much as 1,624,000 tons per annum and light naphtha of 1.06 million tons per annum.

Tuban Petro also has planned to increase the capacity of paraxylene facility using bottlenecking model. In this way, the production capacity will increase to 800,000 tons from 500,000 tons per annum at present.