The Indonesian government is working to finalize a loan restructuring agreement for Krakatau Steel, the country’s largest steelmaker. The state-owned company has begun restructuring talks with its banks, with which it has previously concluded similar agreements.
The planned restructuring loans are worth around USD 1.5 billion in rupiah and other currencies. Krakatau Steel has been struggling in recent years due to cheaper imports from the rapidly expanding Chinese market. The company requested government assistance to protect the local industry after a USD 2 billion debt restructuring was completed in 2020. Following this, Indonesian President Joko Widodo advocated reducing imports of low-quality steel.
On top of these challenges, a fire at one of Krakatau’s facilities last year further complicated matters, prompting the company’s finance director to call for a loan restructuring.
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