(Bloomberg) -- The Indonesian government aims to finalize a loan restructuring agreement between the nation’s biggest steelmaker PT Krakatau Steel and its lenders next month, according to people familiar with the matter.
The state-owned company and its banks have been in talks recently about the master restructuring agreement, after a similar deal in previous years, according to the people, who asked not to be identified because the discussions are private. The total of rupiah-denominated and other loans to be restructured amounts to an equivalent of about $1.5 billion, one of the people said.
Founded in 1970, Krakatau Steel once hosted industrialists from China eager to learn how their nation could accelerate its own output. Fast forward several decades and the Indonesian firm was suddenly having to grapple with cheaper imports from a rapidly growing China and elsewhere.
It sought government support to protect the local industry as it completed an earlier $2 billion debt restructuring in 2020, after which President Joko Widodo—or Jokowi, as he’s popularly known—called for a cut in imports of low-quality steel.
But a fire at one of Krakatau’s plants last year posed a further setback. After that, its finance director said that the company needed to restructure its loans.
A media representative for Krakatau Steel couldn’t immediately comment when reached by Bloomberg News. There was no response from a representative for the State-Owned Enterprises Ministry to text messages and phone calls.
Debt strains have also beset Indonesia’s construction industry, after a push by President Jokowi to build new infrastructure like toll roads and railways. PT Waskita Karya and PT Wijaya Karya signed a combined $3 billion of debt restructuring deals with their lenders this year.
©2024 Bloomberg L.P.
