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EX-IM BANK COMPLETES $283 MILLION LOAN CONVERSION FOR INDONESIA'S CILACAP OIL REFINERY EXPANSION

First Project Finance Conversion in Indonesia

FOR IMMEDIATE RELEASE August 24, 1999

Media Contact Name/Phone: 

Nancy Publicover (202) 565-3200

WASHINGTON -- The Export-Import Bank of the United States (Ex-Im Bank) is completing a $283 million loan conversion supporting U.S. exports for the expansion of Indonesia's Cilacap Oil Refinery signaling the successful transition of the expanded facility to fully operational status and marking Ex-Im Bank's first project finance take-out, or conversion to post-completion financing, in Indonesia. Fluor Daniel Inc.'s Engineers and Constructors subsidiary was the primary exporter on the project, providing engineering, procurement and construction services.

Ex-Im Bank Chairman James A. Harmon said: I'm pleased that we are able to support the involvement of U.S. exporters in this project. Ex-Im Bank offers financing for a wide range of infrastructure projects when commercial banks are unable to provide financing. In this instance, the Cilacap project's economic benefits to Indonesia, its favorable risk profile as a foreign currency-earning project, and the project's record of performance during the last 18 months were all important factors underlying our decision to proceed with the take-out.

Harmon shared his remarks at a ceremony Tuesday attended by U.S. Ambassador to Indonesia Robert Gelbard and Dr. Dorodjatun Kuntjoro-Jakti, Indonesia's ambassador to the United States. Also present were Ed Godlewski, executive director of sales & marketing for Fluor Daniel Inc., Valerie Colville, vice president of project finance for Fluor Corporation, and Hadi Sudibyo, senior vice president and director of corporate finance for Pertamina, on behalf of Pertamina's president, director and chief executive officer, Martiono Hadianto.

Fluor Daniel is delighted to have the opportunity to perform the engineering, procurement and construction on the Pertamina Cilacap project. This continues the long and very successful working relationships we have enjoyed with both the U.S. Ex-Im Bank and Pertamina. We believe that projects like this will be a model for the future, said Mark Stevens, president of Fluor Daniel's Oil, Gas and Power strategic business unit (SBU).

Ex-Im Bank's 1995 commitment to take-out, or assume financing on, the project once it was successfully operational helped Pertamina secure the backing of Fluor Daniel and a group of banks led by Citicorp during the construction phase of the $606 million project. With the expansion project fully operational for 18 months, Ex-Im Bank is making a direct loan to assume financing on the 48 percent of the project which uses U.S. exports. The private lending group will continue tocarry a $309 million balance on the loan beyond the August 19, 1999 take-out date.

The Cilacap oil refinery is owned and operated by Pertamina (Perusahaan Pertambangan Minyak Dan Gas Bumi Negara), the Indonesian national oil company. The Cilacap oil refinery is located on the south coast of Java. The Cilacap expansion project involved removing current process equipment bottlenecks, adding a new lube oil facility and installing new efficient equipment to increase production. As a result, processing of crude oil in the existing refinery complex increased by approximately 16 percent and naphtha production capacity more than doubled. Low sulfur waxy residual oil and lube oil production capacity increased by 28 and 68 percent, respectively.

Ex-Im Bank's limited recourse project finance is a non-sovereign finance arrangement in which repayment is based on project revenues. The financing arrangement helps developing countries build infrastructure without incurring government debt. Until recently, Ex-Im Bank's project finance program has provided financing solely as a term lender and has only financed projects once they were technically complete, while commercial banks provided construction finance. Ex-Im Bank often provides political risk coverage during construction. Conversion from commercial bank finance to Ex-Im Bank term finance (called a take-out) is dependent on the project's ability to meet specific conditions stipulated in Ex-Im Bank's finance commitment.

Ex-Im Bank is the 1999 winner of Project Finance Magazine's Reader's Choice Award for Best Project Finance Export Credit Agency. Ex-Im Bank received the honor, in part, for it responsiveness to the Asian financial crisis and for improvements made to its project finance coverage.

Ex-Im Bank is an independent U.S. government agency that assists in financing the export of U.S. goods and services to industrializing and developing markets all over the world, by providing loans, guarantees, and insurance. Nationally, Ex-Im Bank supported nearly $13 billion in U.S. exports in the 1998 fiscal year.