Jakarta Post, Jakarta, 19 January 2012. Publicly listed property developer PT Pakuwon Jati obtained approval from its shareholders on Wednesday over a request to pledge assets worth more than Rp 2 trillion(US$ 218 million) to obtain funds that will be used in debt and bond refinancing.

Pakuwon Jati director of finance Minarto Basuki said that the assets were Surabaya-based shopping malls Tunjungan Plaza I and III.

"We aim to obtain up to Rp 1 trillion in bank loans by making Tunjungan Plaza I and III as collateral", Minarto said after his company's extraordinary meeting of shareholders on Wednesday.

Minarto said that Pakuwon was in negotiation with about four local banks over the loans. "We will use the loans to refinance our bonds issued in 2006 and 2009 amounting to 43 million in total. The remaining funds will be used to refinance part of our debts which reached Rp 2.05 trillion by December 2011", Minarto said.

According to Minarto, the company's bonds will mature in 2015. The refinancing measure will help the company to reduce interest costs and lower the risk of fluctuation in the exchange rate. "We hope to obtain loans with 10 to 11 percent interest which remains lower than our bonds interest of 12 percent", Minarto said.

Pakuwon is the developer of Tunjungan City superblock in Surabaya, Pakuwon City residential township in East Surabaya and Gandaria City superblock in South Jakarta. Pakuwon recently performed a right issue by offering 2 billion shares for Rp 650 apiece. The company obtained up to Rp 1.3 trillion, which was used to acquire majority shares in PT Elite Prima Utama, the developer of Kota Casablanca superblock in South Jakarta. Pakuwon investor relations official Irene Tedja Murdaya said that the Kota Casablanca superblock would consist of malls, office towers and condominium towers on 9.5 hectares of land.

"We hope to be able to open the mall this June", Irene said. Besides the Kota Casablanca, Pakuwon will focus on the development of Tunjungan Plaza V and the condominium tower of Pakuwon City in Surabaya. "Tunjungan Plaza V which consists of retail sections, an office tower and condominiums will be the highest building in Surabaya with 40 stories", Irene said. She added that Pakuwon would allocate Rp 1.3 trillion in this year capital expenditure to finance its projects in Surabaya and Jakarta.

Pakuwon is targeting to book about Rp 1.7 trillion in revenue in 2012 increasing by about 15 percent from an estimated Rp 1.5 trillion in 2011.