21/10/2011 (Jakarta Globe) - Bakrie Sumatra Plantation, the palm oil-producing arm of the Bakrie Group, has gained shareholder approval to offer its assets as collateral for bank loans, paving the way for it to restructure its mounting debt.

Ambono Janurianto, the president director of Bakrie Sumatra Plantation, said the assets would be used as a collateral to help secure $250 million in loans from several lenders, including Credit Suisse, Raiffeisen Bank International and Bank Internasional Indonesia.

The company plans to use the loans to refinance its maturing debt in November.

“Most of the assets that will be pledged as collateral are land and plantations in Sumatra,” Ambono said after an extraordinary meeting with shareholders in Jakarta on Thursday.

This was the third meeting the company had held seeking approval from its shareholders.

Ambono said the loans would be used to help the company repay $185 million in debt that comes due on Nov. 1.

On Wednesday, ratings agency Standard & Poor’s cut Bakrie Sumatra Plantation’s long-term corporate credit rating from B- to CC as the company took more time than expected to refinance its $185 million bond.

“We lowered the rating because Bakrie Sumatra Plantation has yet to receive final funding commitments from some of the participating banks, including one of the lead arrangers,” Suzanne Smith, a Standard & Poor’s credit analyst, said in a statement.

“The company continues to face delays in finalizing and drawing down on a syndicated bank loan to refinance the impending maturities of its notes,’’ Smith said.

The ratings agency said such delays would jeopardize Bakrie Sumatra Plantation’s ability to repay the $185 million in senior secured notes by Nov. 1.

It is keeping the company’s rating under credit watch “with a negative implication.”

Harry Nadir, the chief financial officer at Bakrie Sumatra Plantation, was not available for comment.

As of the first semester this year, Bakrie Sumatra Plantation had about Rp 10.13 trillion ($1.1 billion) in liabilities, the company’s financial reports showed.

Net sales at the company more than doubled to Rp 2.30 trillion in the first half of this year from Rp 1.13 trillion in the same period last year. Net income surged to Rp 408.10 billion in the first half from Rp 47.26 billion a year ago.

Shares of Bakrie Sumatra Plantation fell 1.7 percent to Rp 290 on Thursday on the Indonesia Stock Exchange (IDX).

Its shares have lost 26 percent this year compared with the 22 percent decline in the benchmark index.