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Krakatau Steel aims US$135 million from rights issue
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A worker uses a metal melting furnace at PT Krakatau Posco's plant in the Krakatau Steel industrial area in Cilegon, Banten, last year. (Kompas/Iwan Setiyawan)
S
tate-owned steel maker Krakatau Steel is aiming for Rp 1.8 trillion (US$135.77 million) in proceeds through a mandatory rights issue that will pave the way for government capital injections to the company worth Rp 1.5 trillion.
In the right issue, set to be launched in the fourth quarter this year, the company will offer 4.9 billion of new shares to existing shareholders with a nominal price of Rp 500 per unit.
"The targeted proceeds is unchanged, at Rp 1.8 trillion. We will use it to build a hot strip mill and an internal 1x150 megawatt power plant," said Krakatau Steel president director Sukandar during the company’s shareholder meeting in Jakarta on Thursday.
Aside from conducting the rights issue to finance the project, the company has also secured a $260 million loan from Commerzbank Germany to help finance the mill. Meanwhile, the coal-fired power plant will be offered in a tender, scheduled in September.
Both of the projects are targeted for operation in 2019.
"Changing the power source from gas to coal will reduce our operational costs. Currently we pay a high price for the gas," Sukandar said, refuting to elaborate more on the gas price. (ags)
