Jakarta, CNBC Indonesia – Minister of State-Owned Enterprises (BUMN) Erick Thohir said there is a possibility that the state-owned steel company PT Krakatau Steel (Persero) Tbk could default or go bankrupt this December. Therefore, a number of restructuring steps are needed.
There are 3 restructuring steps carried out for Krakatau Steel. If these three steps don’t work, Krakatau Steel will go bankrupt.
“There are three steps (restructuring), the problem is that the third step is stuck,” said Erik in a Working Meeting with Commission VI DPR RI, last Thursday, quoted Saturday (4/12/2021).
Erick said that there was an investment in Krakatau Steel in the manufacture of a blast furnace factory worth US$ 850 million in 2008, but the condition was stalled, and it did not provide any benefits. There was hope that this project would be taken over by China but failed.
“You can’t do anything about this item. There was hope that there was technology to make this steel from iron sand and the price could be competitive from the existing process. Yesterday there was also a discussion with their Chinese partners that they want to take over this blast furnace,” said Erick.
“They wanted to completely fix it but added money but it didn’t happen because the price of steel went up so they could build the factory twice, so they backed off,” he said.
Then the second step is being taken regarding work negotiations with one of the steel companies Posco as the largest shareholder of KRAS (issuer code Krakatau Steel), with a share of 70%.
“This renegotiation is also not easy, so far we are partners with Posco, indeed we are in the minority, we are trying to be 50:50, but there is no answer from Posco. It’s called a business,” said Erick.
The final step is the possibility of the Investment Management Institute (LPI) or the Indonesia Investment Authority (INA) to invest in Krakatau Steel.
Erick explained that if these three steps don’t work, Krakatau Steel in December could default.
“This is crucial if the third fails, the second fails, the first fails, then this December (Krakatau Steel) could default,” he explained.
(hps / hps)
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