The MCB fund is a mandate and trust that we must manage properly. Krakatau Steel is committed to applying the principles of good corporate governance and complying with all provisions in the use of the MCB fund.
Jakarta (ANTARA) - State-owned steel manufacturer PT Krakatau Steel Tbk secured an investment of Rp2.2 trillion from the government under the national economic recovery (PEN) program on December 30 last year.

The company received the funding after the inking of mandatory convertible bonds (MCB) between PT Krakatau Steel Tbk and PT Sarana Multi Infrastruktur (Persero), as the operator of government investment on December 28, 2020.

"The MCB fund is a mandate and trust that we must manage properly. Krakatau Steel is committed to applying the principles of good corporate governance and complying with all provisions in the use of the MCB fund," Krakatau Steel President Director Silmy Karim noted in a written statement released on Tuesday

The government’s investment support through the PEN program will ensure the increased supply of raw materials to downstream industries and national steel consumers, thereby aiding to stem the gluts of imported steel to the domestic market, he affirmed.

"With the MCB fund, Krakatau Steel will be able to take requisite precautionary measures against an increase in domestic demand for steel in the wake of national economic recovery expected to take place in the third quarter of 2021," he stated.

Krakatau Steel lauded the strategic steps taken by the government to maintain national economic growth, especially by capitalizing on the momentum of national economic recovery to support the mitigation system to help rescue the economy from the COVID-19 pandemic.

"We are optimistic that the government’s investment stimulus would be able to have a positive impact on upstream and downstream steel industries as well as on the national economic growth," he remarked.

The government is expected to disburse another Rp800 billion in OMB funding to Krakatau Steel in December 2012, thereby bringing the total amount to Rp3 trillion.

Late last year, Krakatau Steel made an announcement that it will issue Rp3 trillion of mandatory convertible bonds under the endeavors to realize the PEN program.

The bonds will be issued all at once and disbursed in two tranches. The first tranche of the bonds, valued at Rp2.2 trillion, will be issued in one to two days, Krakatau Steel Finance Director Tardi stated during an online public event on Dec 29, 2020.

"The remaining Rp800 billion (will be issued) in 2021. With the addition of Rp2.2 trillion at the end of this year, we are optimistic of realizing the 2021 business plan properly, with a sales target of 170 thousand kilo tons per month," he informed.

The bonds will have a tenure of seven years. At the end of the seventh year, the bonds will be converted into new shares under the Indonesian government’s name at Krakatau Steel through capital increase without the pre-emptive right (PMTHMETD) program or private placement.

"There will be dilution of the current public share ownership at Krakatau Steel, from 20 percent to 14-15 percent. Nonetheless, we will maintain the share of public ownership at 20 percent. There will be subsequent corporate action to raise the share of public ownership at Krakatau Steel," Tardi stated.


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Translator: Zubi Mahrofi/Suharto
Editor: Fardah Assegaf
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