Indonesia’s state-owned company Krakatau Steel is divesting its power plant subsidiary Krakatau Daya Listrik (KDL) to another public sector electricity company Perusahaan Listrik Negara (PLN), CEO Silmy Karim said.
The company will sell around 80-100 per cent stake of KDL for around Rp2 trillion ($141.2 million), as reported by Investor Daily.
The two state-owned companies are still in negotiations and the deal is targeted to close by the year-end. According to Krakatau Steel’s financial report by June 2019, KDL noted an asset value of $230.57 million.
KDL has been operating since 1996 with five electric-steam power plants of 400MW capacity. The divestment of KDL is in line with Krakatau Steel’s restructuring process, Karim said.
The company initiated the restructuring process early this year to rejig its debt levels.
The restructuring process is expected to run in three stages that include improving the company’s financial performance, divesting non-core subsidiaries and issuing convertible bonds.
Some banks that provided loans to Krakatau Steel include Bank Mandiri, Bank Rakyat Indonesia, Bank Negara Indonesia, Bank CIMB Niaga, Bank OCBC NISP, Bank DBS Indonesia, Bank Central Asia, Bank Danamon, Indonesia Exim Bank and Standard Chartered.
Aside from KDL, Krakatau Steel also plans to divest three other subsidiaries, possibly through an initial public offering in Indonesia Stock Exchange. Those three subsidiaries are Krakatau Tirta Industri, Krakatau Bandar Samudera and PT Krakatau Industrial Estate Cilegon.
Although an IPO plan is in the pipeline, Krakatau Steel may also divest the stake to a strategic player. In March 2019, the state-owned seaport operator Pelindo II once announced its intention to acquire 49% of Krakatau Bandar Samudera for Rp1.7 trillion ($109.04 million). Meanwhile, state-owned construction company PT PP also announced the acquisition plan of Krakatau Tirta Industri.