PT Indah Kiat Pulp & Paper Tbk (INKP), a pulp and paper manufacturer controlled by APP, under Sinar Mas Group, has obtained bank loans worth USD 250 million. The company will use the funds to finance the construction of Paper Machine 6 with a capacity of 530,000 tons per year.
Indah Kiat Director Suhendra Wiriadinata as quoted by Investor Daily said, Indah Kiat required a total funding of USD 500 million to build Paper Machine 6. Wiriadinata said, the bank loans came with a tenor of five years, two years grace period, and 5% interest rate. The loan will be disbursed in phases in accordance with the development of the project.
This year, Indah Kiat budgeted capital expenditure of USD 300 million. The company allocated USD 250 million of those funds to finance the construction of Paper Machine 6. The remaining USD 50 million would be used for engine maintenance.
Meanwhile, a subsidiary of Indah Kiat, PT Pabrik Kertas Tjiwi Kimia Tbk (TKIM), prepared a capital expenditure of USD 100 million. These funds would be used to complete the construction of Paper Machine 13 with a capacity of 120,000 tons per year.
Environmentalists are concerned that the new mill will put added pressure on natural forests in South Sumatra and adjacent provinces where there aren’t enough plantations to supply fiber to meet projected capacity.