40% of debtors face liquidation: IBRA<\/p>\n
JAKARTA (JP): Deputy chairman of the Indonesian Bank
\nRestructuring Agency (IBRA) Eko S. Budianto said on Wednesday
\nthat only about 60 percent of its 1,689 debtors could be
\nrestructured in a bid to recover their debts.<\/p>\n
\"Only 60 percent are eligible for restructuring. We have to be
\nrealistic because there are businesses which have no prospects at
\nall, and some have too much debt,\" he said.<\/p>\n
Liquidation looms for the 40 percent of companies saddled with
\nhuge debts and few prospects, he said.<\/p>\n
IBRA announced on its website on Tuesday there were 1,689
\ndebtors owing Rp 155 trillion (US$21.23 billion) in problem loans
\nto the agency.<\/p>\n
Eko said the amount of problem loans transferred to the agency
\nas of Wednesday already totaled Rp 172 trillion.<\/p>\n
These debts are from 10 liquidated banks, four nationalized
\nbanks, seven state banks and seven private banks which have
\nsigned on for the government-sponsored recapitalization program.<\/p>\n
IBRA is a government agency invested with the task of
\nrecovering nonperforming loans (NPLs) of liquidated banks, banks
\ntaken over by the government, recapitalized banks and state
\nbanks.<\/p>\n
Eko said the agency expected to eventually control over Rp 230
\ntrillion in NPLs, including those still to be transferred from 38
\nbanks closed down and seven banks taken over in March, and two
\nother private banks which will join the recapitalization program.<\/p>\n
Eko said that of the Rp 172 trillion in problem loans, about
\n90 percent was owed by 900 business groups, while the remainder
\nwas retail credits owed by independent debtors.<\/p>\n
\"I think chances for recovery of the retail loans are much
\nhigher,\" he said.<\/p>\n
He estimated that only 60 percent of the corporate loans owed
\nby the 900 obligors could be recovered through a restructuring
\nprogram.<\/p>\n
Eko identified prospective businesses for restructuring,
\nincluding export-oriented firms, low import content industry,
\nconsumer goods companies and hotels.<\/p>\n
\"The property sector has no prospect, except for hotels
\nbecause of the promising outlook for tourism,\" he said.<\/p>\n
\"Multifinance companies have little prospect for
\nrestructuring.<\/p>\n
\"Petrochemicals are quite viable, but it depends on the
\ncondition of individual companies, particularly their debt
\nstructure.\"<\/p>\n
Among the companies owing massive debts is petrochemical firm
\nPT Chandra Asri Petrochemical Center, which is partly owned by
\nBambang Trihatmodjo, a son of former president Soeharto. It owed
\nRp 2.92 trillion to several state banks.<\/p>\n
Eko said the agency would sell the assets of debtors deemed
\nineligible for restructuring.<\/p>\n
Many have criticized the agency for its slowness in recovering
\nthe NPLs, with suspicions raised because many of the debtors are
\ncompanies belonging to politically well-connected businesspeople.<\/p>\n
Late last week, finance minister Bambang Subianto and IBRA met
\nwith the key executives of the 200 largest debtors, including
\nMohamad \"Bob\" Hasan, a longtime intimate of Soeharto. Bambang
\nurged them to sign a \"letter of commitment\" pledging to be
\ntransparent about their companies' financial holdings and
\nbusiness condition to allow IBRA to design a restructuring
\nprogram.<\/p>\n
Eko said the 200 largest debtors, owing some Rp 70 trillion in
\nNPLs, are expected to sign the letter of commitment by the June
\n22 deadline.<\/p>\n
Two companies belonging to Hutomo \"Tommy\" Mandala Putra,
\nanother Soeharto son, signed the letter of commitment on
\nSaturday. They are shipping operation PT Humpuss Intermoda and
\ncontainer firm PT Humpus Peti Kemas.<\/p>\n
Eko warned that owners of indebted companies declining to
\ncooperate or sign the letter of commitment would have their names
\npublished in newspapers on June 30.<\/p>\n
Indonesia promised the International Monetary Fund, which has
\narranged multibillion dollar funding to finance the country's
\neconomic reform programs, that it would pursue litigation by the
\nend of August against indebted companies failing to reach
\nrestructuring agreements with IBRA.<\/p>\n
Eko said the government's restructuring program did not
\ninclude a debt reduction option.<\/p>\n
Alternatives offered under the debt restructuring program
\ninclude debt to equity swap, debt to asset swap, maturity and
\ngrace period extension and rescheduling of debt installments
\naccording to cash flow conditions.<\/p>\n
\"We have held talks with a total of 350 debtors, and many are
\nwilling to sign the letter of commitment. We expect to complete
\n(loan workout) programs for 400 debtors by the end of December,\"
\nEko added.(rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/40-of-debtors-face-liquidation-ibra-1447893297",
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