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LISTED COMPANY - JAKARTA. PT Sinar Mas Agro Resources and Technology Tbk (SMAR) has secured a term loan of US$ 250 million from PT Bank Negara Indonesia (Persero) Tbk (BBNI).
According to the disclosed information, SMAR and BBNI signed a term loan agreement with a maximum facility amount of US$ 250 million, including related guarantees. The signing took place on April 23, 2023.
Assuming the BI mid-rate as of December 31, 2023, at Rp 15,416 per US dollar, the loan is equivalent to a maximum of Rp 3.84 trillion in rupiah.
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This transaction is a material transaction with a transaction value exceeding 20% of the company's total equity based on the financial report as of December 31, 2023.
As of December 31, 2023, SMAR had total equity attributable to the parent entity's owners of Rp 19.05 trillion. This means that the loan amounts to 20.2% of SMAR's total equity.
“One of the prerequisites for using the loan is that the company must provide certain guarantees,” said SMAR management in the disclosed information.
The purpose of the loan funds is for, among other things, working capital financing, refinancing bank debt or bonds due, and the company's capital expenditure.
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The interest on this loan is the sum of the applicable margin and the secured overnight funding rate (SOFR) for three months. The SOFR reference rate is managed by the CME Group Benchmark Administration Limited.
The loan term is 60 months after the first loan withdrawal date.
The collateral for this loan is SMAR-owned land covering 283,395 square meters, along with buildings, refinery machinery, biodiesel, palm kernel processing, facilities and infrastructure located in Tarjun, South Kalimantan.
Things that SMAR is prohibited from doing without prior approval from BBNI include changing the business field or form or legal status of the company.
Secondly, reducing or decreasing the company's authorized capital, paid-up capital, and/or issued capital. Thirdly, liquidating or dissolving the business. Fourthly, filing for bankruptcy or PKPU to the competent authority.
Lastly, changing, transferring, or selling the company's shares results in a change in the dominant shareholder.
Management sees a positive outlook for the agribusiness industry, supported by a broad market and strong demand. Therefore, SMAR is always striving to enhance its capabilities in producing a diverse portfolio of high-value-added palm products.
“This is also in line with the development of customer preferences towards healthier and more sustainably produced products,” he said.
The implementation of the company's strategy in rapidly changing economic and industry conditions requires strong funding support for working capital and capital expenditure.
This transaction will provide liquidity and enhance SMAR's ability to finance expansion and run its business smoothly.
This allows SMAR to be more flexible and efficient in executing business strategies, so the company can continue to develop its business activities and improve its performance. On the other hand, this transaction will increase the level of liabilities and create an obligation to repay the principal and interest on SMAR's loan.
Management believes there are no material negative impacts from the transaction on operational activities, legal, financial conditions, or the continuity of SMAR's business.
“Ultimately, this transaction is expected to maintain the company's strength in the global palm oil industry and make a positive contribution to SMAR's performance, thereby creating added value for shareholders,” explained SMAR management.
