Sunday, March 7, 2010

Why CIMB Niaga & Stanchart financing LBO Matahari ?

PT Bank CIMB Niaga Tbk and Standard Chartered Bank breaking leverage buy out financing in Indonesia. The duo entitity plans to backing CVC Capital Partners in acquisition 90.76% shares PT Matahari Departments Store Tbk (MDS), one of business entity belong Lippo Group.
Bank CIMB Niaga has annoucce the credit disbursement to MDS will be executed upon getting Bank Indonesia (BI/Central Bank) approval.
Vice President Director of CIMB Niaga Chaterinawati Hadiman said the credit will be given if the divestment of 90.76 percent MDS shares by its holding firm PT Matahari Putra Prima Tbk (MPPA) to CVC Capital Partners is approved by the Capital Market and Finance Institution Supervisory Agency (Bapepam-LK).
The funding facility collateral and the amount of loan are equally shared between Bank CIMB Niaga and Standard Chartered Bank. In the transaction, there are credit facilities provided by Bank CIMB Niaga and Stanchart totally worth IDR3.25 trilion.
It means, the deal will be the first leveraged buy out financing in rupiah denomination.
However, if the loan is given, the collateral is stocks and debitor inventory. The credit will control the debtor account so as to monitor the transaction flow.
The loan has 98 percent MPPA stocks as the collateral with interest rate equivalent to the BI promissory notes plus 6 percent. the other collateral are the IDR1 trillion debt given by MPPA to PT Asri Agung Permai- the subsidiary of MDS, and IDR2.8 trillion debt given by MDS to Asri Agung.
Wooo...its premium price. Is that the only reason for two bank to provide the loan ?
Let see the data, Bank CIMB Niaga formerly merge from two entity PT Bank Niaga Tbk and PT Bank Lippo Tbk. Is that any relationship whay the conservatif banks like Bank CIMB Niaga provide loan for this LBO transactions ?
If the credit channeling violates the regulation, BI will warn the banks to increase provision and tighten the risk control. But if they fail to comply, BI could have imposed administrative sanction but not annul the credit.

3 comments:

Unknown said...
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Unknown said...

Matahari CEO claimed this deal will give a big opportunity for the two banks. There is cross selling potential, cash management system and services.

munir.haikal said...

Thans Puji...Thats for Matahari...how about the bank ?