Bahana in trouble collecting debts<\/p>\n
Rob Delaney and Aloysius Unditu, Bloomberg, Jakarta<\/p>\n
PT Bahana Pembinaan Usaha Indonesia, a state-owned holding
\ncompany that is late repaying US$400 million, is having trouble
\ncollecting debts of its own.<\/p>\n
In 1997, Bahana lent $47 million to Festival Company Inc., a
\nBritish Virgin Islands-registered company owned by timber tycoon
\nPrajogo Pangestu, said Bahana officials who didn't want to be
\nidentified.<\/p>\n
Now Prajogo says he won't honor a guarantee on the loan, used
\nto help buy a stake in a Philippine phone operator.<\/p>\n
I'm "not a shareholder nor a beneficial owner of Festival
\nCompany Inc.," he said in a letter to Bahana dated Jan. 29 that
\nwas seen by Bloomberg News.<\/p>\n
"Since the personal guarantee is no longer legally binding,
\nall obligations and rights attached to the guarantee
\nautomatically drop."<\/p>\n
The difficulties in resolving Indonesia's overdue debt, where
\na weak legal system is discouraging investors, are making it
\nharder for the nation to pull out of its worst economic crisis in
\ndecades. Indonesia has about $60 billion in overdue foreign
\ncorporate debt still to be restructured.<\/p>\n
In January, Bahana's debtors paid a quarter of the $400
\nmillion they owed the company and that had been due in December.
\nThe company used the funds to make payment on some of its own
\nforeign-currency debt, and Bahana's debtors then negotiated a
\nsix-month schedule to repay the remaining $300 million.<\/p>\n
The Festival debt wasn't part of the amount repaid, and the
\nrestructuring agreement was hammered out before Prajogo withdrew
\nthe guarantee, possibly threatening the revamp accord.<\/p>\n
Ignasius Jonan, Bahana's president director, declined to
\ncomment. Prajogo wasn't available for comment.<\/p>\n
Complicating Bahana's efforts to recover the debt, Festival
\ndirectors Loeki S. Putera and Jansen Wiraatmaja resigned on Jan.
\n29, the same day Prajogo denied he had any ties to the company,
\naccording to letters obtained by Bloomberg.<\/p>\n
Neither man could be reached for comment.<\/p>\n
Festival's office is in Wisma Barito Pacific, Prajogo's
\nheadquarters close to Jakarta's central business district.<\/p>\n
Prajogo is president commissioner of PT Barito Pacific Timber,
\nwhich is fighting a petition by bondholders seeking its
\nbankruptcy after Indonesia's largest plywood maker missed a bond
\npayment on Jan. 10.<\/p>\n
Prajogo owns 7.95 percent of Barito Pacific.<\/p>\n
Proving the real owner of Festival will be difficult. Under
\nBritish Virgin Islands law, the identity of shareholders is
\nprotected. Bahana will need an order from one of the tax haven's
\ncourts to get that information.<\/p>\n
Just what Bahana was doing lending money to offshore companies
\nis something Indonesian authorities may be asking Sudjiono Timan,
\npresident director of the company from 1993 until February last
\nyear.<\/p>\n
Under Indonesian law, state-owned non-bank companies like
\nBahana are not allowed to extend loans.<\/p>\n
Bahana is a holding company that doesn't have any real
\noperations of its own. It controls three financial units, PT
\nBahana Securities, fund management house PT Bahana TCW Management
\nand venture capital company PT Bahana Artha Ventura.<\/p>\n
PT Bahana Securities arranged the sale of Rp 2.2 trillion of
\nbonds in the past two years for companies such as Indonesia's
\nlargest cement maker, PT Semen Gresik and Indofood Sukses Makmur,
\nthe world's largest maker of instant noodles.<\/p>\n
Sudjiono is under house arrest and faces 20 years in jail for
\nhis alleged role in Bahana's lending $210 million to companies
\nincluding Festival.<\/p>\n
"The problem with Bahana is abuse by its previous owners,"
\nsaid Lin Che Wei, director of Socgen-Crosby Securities.<\/p>",
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