Bakrie in talks to reach debt restructuring accord<\/p>\n
JAKARTA (JP): Publicly listed PT Bakrie & Brothers said
\nyesterday that it expected to reach an agreement with its
\ninternational creditors by the end of 1998 to restructure its
\nUS$1.2 billion of overseas debt.<\/p>\n
\"Talks are still going on with the foreign creditors and a
\nsolution is expected by the end of the year,\" finance director
\nNalinkant Rathod told reporters following a general shareholders
\nmeeting.<\/p>\n
He said that although most creditors wanted to be repaid as
\nsoon as possible, it would be difficult to satisfy them all due
\nto the sharp fall in the rupiah.<\/p>\n
The rupiah has plunged from Rp 2,450 against the U.S. dollar
\nin July to about Rp 15,000.<\/p>\n
Rathod said that some $400 million of the debt was in bonds
\nwhile the remainder was in syndicated loans.<\/p>\n
He also said that $450 million of the debt was hedged,
\nminimizing the forex losses resulting from the sharp fluctuation
\nin the rupiah's value.<\/p>\n
Bakrie & Brothers is a diversified group with core businesses
\nin agribusiness, infrastructure support, and telecommunications.
\nThe group also has investments in strategic sectors.<\/p>\n
Bakrie ruled out issuing a dividend for the calender year 1997
\ndue to the company's poor performance during the year, which saw
\na loss of Rp 283.9 billion, compared to a net profit of Rp 187.1
\nbillion in 1996.<\/p>\n
The agribusiness and infrastructure divisions booked a net
\nprofit of Rp 26.4 billion and Rp 80.1 billion respectively.<\/p>\n
But the telecommunications and strategic investment divisions
\ncontributed a losses of Rp 334.7 billion and Rp 55.8 billion
\nrespectively.<\/p>\n
Performance<\/p>\n
The poor performance mainly resulted from the write-off of
\ninvestments in 30 incomplete projects that were not viable or
\ncanceled by the government as a result of the economic crisis,
\nBakrie said in a statement.<\/p>\n
It added that various trade receivables that had to be written
\noff, mainly from the Ratelindo telecommunications fixed-line
\nprovider, also contributed to the loss.<\/p>\n
Many telephone lines had to be terminated as a result of
\ncustomers not being able to pay their bills amid the economic
\nhardships, it explained.<\/p>\n
Yesterday's shareholders meeting also appointed a new
\npresident, Irwan Sjarkawi, the former president of state-owned
\ntrading company PT Pantja Niaga.<\/p>\n
Irwan replaces Tanri Abeng, who was appointed state minister
\nof the empowerment of state enterprise in May.<\/p>\n
Irwan said that part of the efforts to survive the economic
\ncrisis was to sell or divest the firm's stake in several
\nsubsidiaries.<\/p>\n
He wouldn't provide details of the plan but said the company
\nwas still looking for buyers.<\/p>\n
Rathod said that proceeds from the sale of the stake might be
\nused to pay off Bakrie's foreign debts.<\/p>\n
The diversified group has not yet decided whether to join the
\nscheme offered by the government-backed Indonesian Debt
\nRestructuring Agency (INDRA) to deal with its foreign debt
\nproblem. In the meantime it will continue negotiations with the
\nhelp of its financial advisor Chase Manhattan.<\/p>\n
\"We're still waiting for the details (of the INDRA scheme),\"
\nRathod said.<\/p>\n
INDRA was established early last month to provide a scheme to
\nassist the country's debt-ridden companies deal with their
\noverseas debts. The agency will start operating on August 1.<\/p>\n
Assurance<\/p>\n
Under the scheme, agreed with foreign lenders in Frankfurt on
\nJune 4, INDRA will provide debtors with foreign exchange
\nprotection and assurance of the availability of the foreign
\nexchange. This agency will assume the full exchange risk of
\ndollar-denominated debt repayments but will not provide any
\nbailout for the private debts.<\/p>\n
The international creditors agreed to restructure $60 billion
\nof the country's private sector foreign debt for eight years,
\nincluding a three-year grace period.<\/p>\n
Analysts, however, said that despite the Frankfurt agreement,
\ncompanies would still have difficulties paying their overseas
\ndebts due to the rupiah's continued plunge and the effects of the
\nshrinking economy.<\/p>\n
They said creditors should cut the principal by 30
\npercent. (rei)<\/p>",
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