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1. When will the contract(s) for the road construction be awarded?


It’s been awarded since 2014 (see slide 5, the right red, blue and purple columns)
2. When will road construction start?
All sections began in 2016, however there are several priority areas that must be completed
earlier. In Hutama Karya Road map, all sections must be finished by 2026
3. Are there supply contracts ready to sign (Production and Retail)?
No. HK Holding will provide the production contract to us after we have meet our agreement
with HAKAASTON. The draft of contract will be given after MOU with HAKAASTON.
4. Are the 3 nominated road sections the only one’s available to supply?
NO. Besides the closest coverage area, those 3 road sections are the top priorities that must
be completed in 2021. Pekanbaru – Dumai Toll Road must be operating by the end of 2019
5. What will be the payment and delivery terms?
The payment will be covered by SCF/SKBDN after HK Holding received the material. (it
depends on the contract condition either on site or on jetty deliveries).
6. How many years will the supply contracts run for?
Minimum 5 years.
7. Will the Quarry Contractor be the only supplier?
HK Holding will prioritize its subsidiaries (HAKAASTON) to participate in the construction. They
may be appointing other vendor if its subsidiary does not have enough resources to fulfill their
needs. We have an exclusive contract
8. Who are the shareholders of HAKA ASTON?
Hutama Karya Holding owned 97% others 3 % are Top management and commissioner of
HAKAASTON.
9. What will be the relationship with HAKA ASTON? (e.g. JV, independent operators)
HAKAASTON open for all forms of collaborations (JV, JO, Independent operation. We just need
to look from legal, technical, and financial aspect to find a suitable form of corporation. My
suggestion is Joint-Operation.
10. What % will HAKA ASTON have?
Shares ownership will depend on equity placement to the joint company. for now, my
proposal to them is 20%.
11. Proposed corporate structure?
- We create a company in Singapore (say it X)
- We create a company in Indonesia (say it Y)
- Company X will have majority shares of ownership in company Y
- Company Y will cooperate with HAKAASTON.
12. Date the financing will be required and the drawdown?
- Signed a Memorandum Of Understanding (1 week)
- Document Review, Proof of Fund (1 week)
- Feasibility Studies (3 weeks)
- Cooperation agreement (1 week)
- Project start (1 week)

Disbursement will go in stages based on the project needs. We expect the first drawdown
should be in the end of May.
QUARRY SITE
1. Is it currently an operating quarry?
Yes. The owner has taken care of the permit/license for the quarry including hauling access
but has not start mining yet
2. Is the rock suitable for road construction?
Yes. See slides 7 on the product variety.
3. Is there a survey report?
Yes. Currently HAKAASTON only have stone specification.
4. Life of quarry (how many cubic meters?)
The studies by consultant has shown only the stone specification. The area size of 200 ha and
50 ha licensed-mining area are validated according to owner certificates.
5. Existing Quarry License? If so can it be transferred? If not how long to be issued?
It can be transferred or replace to new owner and permit period can also be extended.
6. Are all Environmental and other government approval(s) in place.
Not all. HAKAASTON will taking care of all document that needed. State Owned Enterprise
have the advantage in getting approval or permit and will not get any issue from society
because its government delegation.
7. Is there local community approval (blasting / use of public road to jetty / private land access
to jetty)
Jetty and Hauling access has been approved. I don’t have information for blasting yet.
FEASIBILITY STUDY?
1. What will the Feasibility Study cover (e.g. mining / transport / economics)
Normally we get (Quarry deposit and specification, Economic aspect, hauling distance and
design, potential development, weather condition, operation schedule, site design, jetty
design and construction, ETC) any additional studies will be further discussion.
2. How long will it take to complete? When will the final report be available?
Usually the consultant requires 2-3 weeks to complete the data after we signed the contract
with them.
3. Who will be the consultant?
usually SOE appointing top university as a consultant such as Bandung Technology Institution
[https://www.itb.ac.id/] or University of Indonesia [http://www.ui.ac.id/] or other SOE’s
consultant such as Yodya Karya [http://yoka.co.id/yodya/], AMKA [http://www.amka.co.id/].
But in this case the appointment for consultant can be anyone.
4. Will there be an English language version?
Yes.
5. If Feasibility Study says not to proceed, then are there an alternative quality project to use the
USD10M on?
Of course, currently I have 3 potential projects with SOE in acquiring fabric and capital
injection. I will provide a complete data if this project is not feasible.
QUARRY OPERATIONS & LOGISTICS
1. Who will be the Quarry Operator (on the ground, day to day planning, control and direction)?
HAKAASTON will place and operate their asset (Stone crusher, Trucks, Excavator) on the site.
We will put our manpower to supervise the operation, manage administration and
accounting. But this may change after we have further discussion with HAKAASTON
2. Will contract terms (i.e. payment terms) be delivery be ex works (at the jetty) or will it be at
the Construction sites?
The agreement terms with HK Holding is quite flexible. We could set the delivery agreement
to stock pile or in Sumatera jetty or even in our own jetty. We will consider all forms of
agreement by looking risk and finance aspect.

3. If at the construction site who will provide shipping (presumably barge + tug)?
Any additional services from third party will be screening by HK. It not binds to anyone but
usually HK will recommend their existing vendor to cooperate.
4. Who will provide the unloading facility on the Sumatra side?
HK Holding.

Note:

1. Stages to get this project:


a. Letter of Intent to HAKAASTON (Done)
b. Document Review
c. Proof Of Fund
d. MoU
e. Feasibility Studies
f. Contract Review (HK HOLDING, HAKAASTON, Us)
g. And Sign

2. Summary of the project:

HK Holding has set a huge sales target for HAKAASTON to IPO in 2020. HK as a holding
company has been providing HAKAASTON with enough sum of equity to grow their business
by making aggressive acquisition for factory (precast, spun pile, pile) and quarry to fulfill HK
holding needs.

HAKAASTON is looking for strategic partnership to help them grow. They prefer to find partner
to acquiring more asset rather than using its own money. This will shorten their equity.
Question to Hongkong financier:

1. What are the detail requirement from Hongkong?


The funds will be drawn down from HK into the SG Company. The SG Company will
sign the master loan agreement. As Directors we (you and I) will have to sign
Guarantees. Not sure what else they will require. They may want a guarantee from
the IND company and be named on the contract along with HAKA ASTON and our
IND company. They may also want invoices paid into a bank account they control
initially and disburse to us for a period of time until they are satisfied we can
perform and then hand back to us full control. We will have to wait until I find the
financier and they will provide a list of their requirements. It will be commercial
terms.
2. What are document needed for this process?
Step 1: Draft MOU with HAKA ASTON and draft HK Holdings contract (both unsigned,
no letterhead) would really help me convince a financier. It will take a few weeks to
find someone and for them to provide proof of funds.
Step 2: Provide a copy of the Feasibility Study report and Cash flow Forecast (I’ll
fund our share of the Feasibility Study and get reimbursed. We will need to provide a
Cash flow forecast to prove our capacity to repay).
Step 3: We will sign the loan agreement at the same time (literally all documents on
the table and sign one after another) we sign all the other documents, including the
HAKA ASTON Joint Operations agreement, HK Holding contract, Directors
Guarantees, cross guarantees and any other documents.
3. Can you provide proof of fund or any valid document that stating our investor fund?
Not sure what you are asking here. I need to find the Financier first and then get
them to provide proof of funds. I’m looking for 100% debt finance.
I’m no longer considering an investor as that introduces a third party and
complicates things. My preference is two of us and one financier – cleaner and
uncomplicated.
4. Are we still expecting 7.5% p.a? (are we calculating yearly or monthly basis – ex we
paid off within 15 months)
I’m looking in the range 7.5-8.5% depending on the security we offer.
We certainly want to repay the loan as quickly as possible. 24 months would be ideal
for us, however we will have to wait and see what the cash flow forecast tells us
about our ability to repay. It may be shorter or longer (e.g. 18-30 months).
I’m looking for a financier who is prepared to roll over the loan. Meaning once we
repay 75% + of the loan we sign new documents for the next project and re-use the
loan facility.
5. How long our contract with the investor?
Not an investor. A financier. The term of the Loan agreement will depend on our
ability to repay.
You will need to find investors for your PANNA KAPITAL once it is in shape to start
seriously talking IPO (important to have cornerstone in investors involved pre IPO as
you know).
6. How is your relationship with the investor? Do you put collateral to get the fund?
My relationship with the financier will be “at arms length”. I won’t be an investor,
public officer or agent so no conflict of interest. Yes, they will probably require a
security deposit of 5-10% of the loan (i.e. USD0.5-1M) which I’ll take responsibility to
source for us.
7. I also need your portfolio so I can convince HK CEO to partnership with you.
Let me find the financier first and proof of funds first. It’s not me HK will be
partnering with. Most important is the financier.
8. I need fully understand about disbursement money from Hongkong to Singapore and
vice versa. (tax, transfer fee, ETC).
A. We will have to pay for all documents prepared (standard for the borrower to
pay). Maybe USD20K “set up fees”. Pay ourselves, then get reimbursed.
B. Our SG company will sign drawdown notices and lodge with the Financier. They
will then transfer the funds to our USD account in SG. They will pay their bank
transfer fees and we will pay ours. NO monies removed for any other fees.
C. We will borrow in USD and have to repay in USD. My idea is to select a bank (e.g.
Mandiri and set up IDR and USD accounts for our IND company and buy IDR/USD
FX contracts with the bank monthly (locks in the USD rate and should be cheap).
Then have our SG company bank with Mandiri in SG with a USD account and
monthly transfer from one account to another.
D. SG company then transfers interest + principal amount to Financier USD bank
account (each responsible for their own bank charges).
E. The Indonesian Government will require our IND company to pay withholding tax
of 10% on the interest repayment (not the principal) transferred to our SG
company. We would be paying the 10% as company tax in IND anyway so net
neutral payment (i.e. reduces our company tax).
F. So set up fees then no further disbursements other than standard bank fees.
What we borrow we get and use on our project.
G. Which reminds me – we will need an experienced and qualified accountant on
staff and we will need to appoint tax accounts in IND (e.g. Price Waterhouse)
who know the IND tax system our company tax process is smooth.
9. I can guarantee that the project exists, valid and real. If not feasible, I have others
project with a contract and LC guarantee. What are the guarantee that we will
receive the money after they approve? (we don't want to have same mistake)
If we tick all the boxes and provide everything required by way of
documents/guarantees etc. then the funds will flow. After I find the financier and
proof of funds the next step is the feasibility report and cash flow forecast. Then line
up all the financiers requirements and then deliver each and every one of them.

Step by step. Let’s focus on what we need to do and not create expectations with
HAKA ASTON and HK until we know we can deliver.
Feasibilities Studies:

1. Before doing FS we have to sign an MOU with HAKAASTON which mean we need to
submit our Indonesian company name to them (I can handle this issue). in this stages
our relationship with HAKAASTON will be clearer and we might get prognosis
calculation of the project.

2. I will try to talk with HAKAASTON to cover FS and report expenses or at least divide by
both parties equally.

Additional information:

1. I need to know more about the Petroleum Consultants (Asia) Pte Ltd. (your company
portfolio experience, project that is already running, funds that you have been
collected, etc.). This will help me to convince HK Holding and HAKA ASTON about my
partner capabilities.

2. Currently I have few companies:

a. PANNA PERSADA INDONESIA (a consultant in power plant industries – 90%


ownership).
b. PANNA CONSTRUCTION ENGINEERING (a construction company for Dam, Toll
Road, ETC – 35% ownership. Others is Korea. It’s a foreign registered
company).
c. PANNA CAPITAL (it never run or trade, 50% ownership)

PANNA’s name is well known and had good experience in several SOE’s companies. So I
suggest we still using “PANNA” name for our company, example PANNA RESOURCES.

What I am going to do:


1. I will be taking care of our document in Indonesia including your name as a
shareholder. (this will take 1-2 weeks).
2. Put deposit fund into the account.
3. I will set a meeting with HAKA ASTON to discuss further about this project (the result
from the meeting are: Corporation structure, time frame, partnership period of time,
cost of buy-sell from HK Holding, shares ownership in the joint company, operation
responsibility and task).
4. I am going to ask production contract draft from HK Holding, MoU draft from HAKA
ASTON and any additional legal document. (I have purchased contract between HK
Holding and Bhirawa Steel (HK subsidiary) in Bahasa on my hand, do you need that?).

Notes:
1. Can you estimate the cost for us to start at the beginning? (example. document and
agreement set up in Singapore, insurance and notary, ETC).
2. I am not doing anything as I mentioned above before you find a right financier that
confident to working with us. I believe your experience and expertise can handle this.
There is an updated information on Selajar island project:
1 Total size of quarry is 190 HA. It has 2 permit licensed (each permit license holds 88 HA).
2 There are 2 separate mountains, its 1 km distance from one to the others.
a. first mountain is next to the jetty so there is no hauling distance.
b. second mountain is 1 km distance to the jetty.
3 the draft level for the jetty is accessible for 300 ft. barge to berthing. With this size we can
maximize the shipment
4 Yes. They have blasting approval.
5 Current status HAKA ASTON is about to partnering with the land owner. IF they collaborate
with us they will transfer 4 stone crushers from other places to maximizing the production.
6 We can purchase the land partially. This will be good for us. (i.e. 1 stone crusher can cover for
10 HA; we could buy 10 HA first)
7 We discussed about their expectation with us and the investment cost can reduce to USD 7.5
– 8 million. (you can go for that amount now) after FS the actual cost may reduce 15-20%.
8 There are 5 land status in Indonesia, this land is SHM “Sertifikat Hak Milik” or (Ownership land
certification).
9 Additional product for the site: Granite Stone (tons of it)

Summary:
HAKA ASTON next target is to start mining the Selajar island sources no matter what the collaboration
will be. They understand our position and partnering with us is their preference. Thus, they give me
commencing timetable (starting 25 April):
1. 2 weeks for us to find the potential financiers
2. week 3 to start feasibility studies and document review.
3. Week 4 to make decision.
4. They accept if the drawdown may take 2 weeks after we signed the agreement. (so we only
have 6 weeks’ period of time)

What we will discuss on the 1st may? (So I can prepare necessary document)
Hi Russell,

You need to know the chronology about my relationship with ENCONA and Mr. Dindin (CEO of HK-A).
I have good record in having a business with many SOE’s especially in construction company. I give
them beneficial aspect for them such as finding them a credible sub-contractor, bringing foreign or
local investor, getting private project for them and many more. So I am not looking for the project but
the project comes to me just so you know. This leads to Mr Dindin issue, he came to me and asked me
about getting investor or loan to purchase an Island (Selajar Island). Why? Because HK-A requisition
to HK Holding in investing and acquiring the island was rejected. Therefore, DIndin asking me a favor
about this.

As I mentioned before I have few networks for investor or financier (including you) both local and
overseas. I said yes to him so he gave me detail data about the project. From here I talk with some
people and I found ENCONA. Dindin was informed and happy having ENCONA as part of the project.
Meanwhile, what Dindin and ENCONA known was I could bring overseas financier (which is you) with
low rate compare to local bank. This is something a very perfect symbiotic mutualism for every parties.

I have not stating any collaboration or deal structure with them yet. But what HK-A and ENCONA sees
the structure is like this:

1. HK-A designation a contract to JO (PANNA-ENCONA).


2. ENCONA will cover JO capex + Opex with their credit line (interest rate 10,8 – 11,5 %) as a first
wave. In this terms ENCONA will have majority shares of the JO.
3. PANNA accessing a financier with lower rate (expecting 8,5% like you said) as a second wave.
4. Either PANNA is able to refinancing ENCONA loan 100% to the JO or just 50%. This will lead to
JO shares ownership.
Hi Russell,

Thank you.

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