"The signing of the credit agreement was conducted on between the company and BNI on Tuesday (25/9)," said Corporate Secretary of the Company, Elies Lestari Setiawan, to Investor Daily in Jakarta, Wednesday (26/9).

She explained that the loan has tenor of 1 year with the floating interest rate of 12.5%.  But, according to the agreement, the tenor can be extended upon mutual agreement of both parties.

The transaction was deemed immaterial, according to Elies, and therefore the decision to accept the loan was not subject to approval from the shareholders. The general meeting of shareholders of Sierad that will be held soon will only discuss the amendment to the articles of association in relation to the changes in the composition of the Board of Director.

According to the plan, Sierad will use Rp 200 billion of the loan to improve the production of the feedmill.  The remaining of Rp 25 billion will be used to increase the chicken population in its contract farming from weekly population of 900 thousand into 1.2 million.

Prior to accepting the bank loan, the management of the company planned to issue bonds worth Rp 200-500 billion, which was finally terminated.

Elies added that the company has planned to spend Rp 48 billion in capital expenditure in 2007. The fund was set aside from the internal reserves.  Some of this capital expenditure has been used for the chicken-breeding farm.

Currently, Sierad owns 12 breeding farm located in West Java and Lamongan, East Java. The additional breeding farm is intended to serve the market demand.

The company will also increase the purchase of locally grown corn as the main ingredient for the feedmill production and optimizing the corn drying facility.