Inalum to issue global bonds
Jakarta, posted: Fri, September 7, 2018 | 08:07 am
State mining holding company Indonesia Asahan Aluminium (Inalum) plans to issue global bonds whose proceeds will be used to pay for a loan to finance the purchase of majority ownership in Freeport Indonesia (PTFI), the operator of the world’s second-largest copper mine in Papua.
The company needs the US$4 billion loan to realize the muchawaited transaction and become the major shareholder of PTFI, the local subsidiary of United States-based miner Freeport-McMoran Copper & Gold Inc. (FCX).
The bonds issuance will ensure the company’s financial health amid the PTFI deal, which is expected to be completed by the end of September, Inalum president director Budi Gunadi Sadikin told the press on Thursday.
“To pay off the loan [for PTFI], we will issue global bonds as we don’t need to pay the principal loan in advance, but rather focus only on the payment of interest each month,” he said. “Therefore, [in the short term], our cash flow will be healthy.”
According to the heads of agreement (HoA) signed by Inalum and FCX on July 12, Inalum will disburse $3.85 billion to buy some 40 percent of Anglo-Australian Miner firm Rio Tinto’s participating interest in PTFI and 100 percent of FCX’s shares in Indocopper Investama, a local mining investment company.
Budi, who is also a former banker, said Inalum had yet to determine the bonds’ tenor as the company was still preparing a road show for investors. Nevertheless, he was confident that the bonds issuance would be held no later than year-end.
Previously, Energy and Mineral Resources Minister Ignasius Jonan stressed that the agreement for Inalum to become the major shareholder of PTFI would be done no later than September this year.