Consortium prevails in Kanindotex takeover<\/p>\n
JAKARTA (JP): The protracted saga of the Kanindotex Group
\ntakeover ended last night as a consortium lead by businessman
\nBambang Trihatmodjo, President Soeharto's second son, secured all
\nof the troubled textile group's controlling shares as well as its
\nmanagement.<\/p>\n
\"From this moment on, the consortium has formally become the
\nproprietor and manager of Kanindotex,\" Bambang, who is a major
\nshareholder of the Bimantara conglomerate and treasurer of the
\nruling political group Golkar, told reporters after final
\nnegotiations concluded last night.<\/p>\n
The meeting, which began in the afternoon, was attended by
\nmembers of the consortium, top executives of Kanindotex's
\ncreditors -- state-owned Bank Bumi Daya (BBD) and Bank
\nPembangunan Indonesia (Bapindo) -- as well as Noorbasja Djunaid,
\nchairman of the Indonesian batik cooperatives association (GKBI),
\nwhich was assigned by the Ministry of Finance last year to run
\nKanindotex after it defaulted on Rp 1.3 trillion (US$585 million)
\nin loans owed to the two state banks.<\/p>\n
Yesterday's meeting, which lasted almost three hours, resulted
\nin a clear victory for Bambang's consortium, called PT Apac
\nCentury Corporation. The consortium now controls 90 percent of
\nKanindotex's shares as well as its management responsibilities.<\/p>\n
The meeting's press release, which was jointly signed by the
\npresidents of BBD and Bapindo, stated that the consortium had
\n\"promised\" to allocate the remaining 10 percent of the shares to
\na group of cooperatives not associated with GKBI.<\/p>\n
Bambang's consortium had already acquired a 70 percent stake
\nin Kanindotex's listed subsidiary PT Mayatexdian early this year.<\/p>\n
The outcome of yesterday's meeting has put an end to the calls
\nfrom various parties that GKBI, Kanindotex's present caretaker,
\nmaintain its management control over the textile group.<\/p>\n
GKBI's management contract, granted by the Finance Ministry
\nlast year, was meant to be valid until September 1997.<\/p>\n
Noorbasja Djunaid, who left within the first five minutes of
\nyesterday's negotiation, said: \"We got nothing at all...GKBI will
\nlooking for somewhere else to make money.\"<\/p>\n
Several organizations, including the economic section of the
\nruling Golkar party and the Indonesian Chamber of Commerce and
\nIndustry, as well as several business analysts and legislators,
\nhave argued that GKBI should be allowed to hold some controlling
\nshares in Kanindotex, which owns three mills in Central Java in
\nwhich more than 10,000 workers are employed.<\/p>\n
Intervention<\/p>\n
Yesterday's meeting also finally ruled out any possible
\nintervention by BBD and Bapindo, since the banks failed to secure
\nany controlling shares.<\/p>\n
Benny Sutrisno, a member of the consortium who is now the
\npresident of Kanindotex, confirmed that yesterday's agreement
\nalso dropped a government suggestion that might have facilitated
\na management takeover by BBD and Bapindo.<\/p>\n
\"This concluding agreement also cancels a point contained in
\nthe previous memorandum of understanding which stated that,
\nshould the consortium fail to honor Kanindotex's debts in the
\nfirst nine months, the creditor banks could take over the
\nmanagement of the textile group,\" he said.<\/p>\n
Benny said that the dropped point was originally proposed by
\nMinister of Finance Mar'ie Muhammad.<\/p>\n
The takeover agreement of Kanindotex was originally planned to
\nbe concluded on March 31 but was delayed at the last minute,
\nreportedly because of Mar'ie's insistence that the consortium
\nreserve about 20 percent of Kanindotex's shares for BBD and
\nBapindo and a further 20 percent for GKBI.<\/p>\n
Mar'ie was not available for comment last night.<\/p>\n
Repayment<\/p>\n
Yesterday's meeting determined that the consortium would
\nprovide Rp 539 billion, of which Rp 369 billion would be used to
\nrepay Kanindotex's investment loans to BBD and Bapindo within a
\nnine month period.<\/p>\n
The remaining Rp 170 billion is to be used for equity
\ninvestments and to increase the textile group's working capital.<\/p>\n
The rest of Kanindotex's debts are to be paid within eight
\nyears with an annual interest rate of 11 percent, a level well
\nbelow the prevailing market rates of about 20 percent.<\/p>\n
The 11 percent annual rate represents a compromise between the
\nconsortium and the creditors, since Bambang had previously asked
\nfor a two percent rate for the first four years and a four
\npercent rate for the remaining period.<\/p>\n
\"Actually the 11 percent annual interest rate is still
\nburdensome to us,\" Benny said, adding that the banks had
\noriginally proposed for a 15 percent annual rate.<\/p>\n
Kanindotex was previously owned by businessman Robby Tjahjadi,
\nwho served time for smuggling luxury cars in the late 1970s.<\/p>\n
The Kanindotex issue became the subject of political debate
\nafter a parliamentary investigation lead by a Golkar legislator
\nlast year exposed Robby's failures to honor the textile group's
\ndebts.<\/p>\n
The Golkar legislator, Bambang Warih Koesoemo, who also
\nclaimed that Robby had marked up Kanindotex's real worth to
\nsecure a bigger loan, was eventually dismissed by his party
\nearlier this year for purportedly deviating from the official
\nline.<\/p>\n
Robby Tjahjadi himself has never faced formal charges up to
\nnow. He is thought to be living in Singapore.(hdj\/32)<\/p>",
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