PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Six months ended June 30, 2007 and 2006 Expressed in rupiah, unless otherwise stated
50
25. DERIVATIVE INSTRUMENTS continued
a. Cross Currency Interest Rate Swap As of June 30, 2007, the Company has a Cross Currency Interest Rate Swap CCIRS transaction
with Standard Chartered Bank, Jakarta Branch SCB to hedge its US150 million debt to HC Finance B.V. Under the CCIRS, the Company will purchase U.S. dollars with a notional amount of
US150 million from SCB on March 8, 2009 maturity date fo r a fixed exchange rate of Rp9,358 to US1. Also, SCB will pay the Company quarterly interest in U.S. dollars computed at the rate of 3
Months’ LIBOR + 1.80 per annum in exchange for the Company paying quarterly interest to the SCB in rupiah computed at the rate of 3 Months’ Sertifikat Bank Indonesia SBI + 1.99 per
annum on the above-mentioned notional amount using the above exchange rate. The above interest payment period is the same with the interest payment period of the HC Finance B.V. loan.
Based on an amendmen t to the CCIRS dated August 10, 2006, effective July 20, 2006, the quarterly interest to be paid by SCB to the Company will be at the rate of 3 Months’ LIBOR + 1.15
per annum , while the interest to be paid by the Company to SCB will be at the rate of 3 Months’ SBI + 1.33 per annum. As of June 30, 2007 and 2006, the Company recognized the net liabilities on
the CCIRS contract at fair value of R p65,588,479,776 and Rp46,687,776,300, respectively, which are presented as “Long-term Derivative Liabilities” consolidated balance sheet.
The CCIRS instrument can not be designated as a hedge for accounting purposes and accordingly, the gain arising from the changes in the fair va lue of the CCIRS amounting to Rp10,350,521,384
were recorded as part of “Foreign Exchange Gain - Net” presented in the six months ended June 30, 2007 consolidated statement of income.
b. Forward exchange contracts with Standard Chartered Bank, Jakarta Branch entered into on May 22, 2007, with notional amounts aggregating to US1.5 million which will mature on various
dates in 2007 and 2008, at fixed exchange rates ranging from Rp8,800 to Rp8,835 for every US1. The derivative instruments as mentioned in item b above can not be designated as hedge for
accounting purposes and accordingly, changes in the fair value of such instruments are recorded directly to earnings. As of June 30, 2007, the Company recognized the net receivables on the above
derivative instruments at fair value of Rp450,345,236, which is presented as “Derivative Assets - Net” in the 2007 consolidated balance sheet.
The gain arising from the derivative transactions amounting to Rp450,345,236 for the six months ended June 30, 2007 was recorded as part of “Foreign Exchange Gain - Net” presented in the 2007
consolidated statement of income.
26 . LITIGATION
On February 24, 2004, Ati binti Sadim dkk “Plaintiffs”, who represented themselves as the heirs of the owners of land with an area of 2,665,044 square meters located in Cipulus and Pasir Kores, Lulut
Village - West Java , filed a lawsuit against the Company for alleged unfair practices employed by the Company in acquiring the aforementioned land, specifically for the following reasons:
•
The land price is too low and inappropriate.
•
The purchase price was determined only by the Company.
•
The Company did not involve the Plaintiffs in the land measurement process.
• The Company has not paid the price for land with an area of approximately 934,111 square meters
of which it has taken possession. The total loss being claimed by the Plaintiffs due to their inability to use the land for a 30-year period
amounted to Rp41,103,585,000.
PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Six months ended June 30, 2007 and 2006 Expressed in rupiah, unless otherwise stated
51
26. LITIGATION continued
