Depressed debt task force receives boost from debtors<\/p>\n
JAKARTA (JP): Amid the frustratingly sluggish pace of
\nrestructuring the country's private overseas debt, local
\ncompanies acknowledged on Friday the constructive role played by
\nthe Jakarta Initiative Task Force in kick starting deadlocked
\nnegotiations with foreign creditors.<\/p>\n
\"We initially lacked confidence in the Jakarta Initiative...
\nbut it turns out that they were very helpful in pushing forward
\nthe negotiation process, particularly after we became
\ndeadlocked,\" Victor Fanziscus, director of publicly listed
\nunderwear manufacturer PT Ricky Putra Globalindo (RPG), said
\nduring a media conference organized by the task force.<\/p>\n
Like many of the country's indebted companies, RPG has
\ncomplicated debt obligations, including a US$20 million
\nsyndicated loan involving 10 banks, $7.2 million in convertible
\nbonds involving six institutional investors and a $5 million
\nbilateral loan owed to three banks.<\/p>\n
Victor said the company's arduous debt restructuring
\nnegotiations seemed to be going nowhere, with bondholders and
\nsyndication banks having different interests.<\/p>\n
He said bondholders would only agree to convert the debt to
\nshares if the banks agreed to extend the maturity of the loans.<\/p>\n
\"After around one year of negotiations, we decided to come to
\nthe Jakarta Initiative.<\/p>\n
\"The deadlocked negotiations were arbitrated by the Jakarta
\nInitiative as a neutral party .... The staff of the Jakarta
\nInitiative appeared to already personally know the bankers,\" he
\nsaid.<\/p>\n
Victors said his company had outstanding overseas debts of
\nsome $32 million when restructuring talks were opened in June
\n1998. It also had a $6 million interest rate charge for failing
\nto service its debts on schedule, with this figure scheduled to
\ninflate to $8 million the following year.<\/p>\n
Victor said the interest rate charge was erased after the
\ncompany reached a restructuring agreement last month, which
\nincluded an extension of syndicated loans into 2004 and the
\nsettlement of convertible-bonds debt through a rights issue.<\/p>\n
Some 2,200 private Indonesian companies have a total of some
\n$67 billion in foreign debt and Rp 300 trillion in domestic debt.<\/p>\n
A resolution of the debt problem is seen as crucial for the
\ncountry to lift itself from the current economic crisis.<\/p>\n
Most companies stopped servicing and repaying their debts
\nafter the value of the rupiah against the U.S. dollar plunged by
\naround 80 percent last year.<\/p>\n
The government launched the Jakarta Initiative Task Force in
\nSeptember 1998 to encourage debtors and creditors to reach
\nout-of-court debt settlements; a result preferred by the
\ngovernment, as the bankruptcy alternative would lead to mass
\nlayoffs.<\/p>\n
The Jakarta Initiative has hired several foreign debt
\nrestructuring experts to help in the often difficult and complex
\nnegotiations.<\/p>\n
But critics have said the huge cost of the Jakarta Initiative
\nis unjustified, because the task force is ineffectual and
\npainfully slow in reaching debt restructuring deals.<\/p>\n
Jakarta Initiative chief operating officer Joseph Luhukay
\ndefended the task force, saying that private sector debt was
\nextremely complex, involving numerous creditors with various
\ninterests.<\/p>\n
The executive secretary of the private sector debt
\nrestructuring team, Irzan Tanjung, acknowledged that people were
\ngrowing increasingly impatient with the sluggish progress of the
\ndebt restructuring program.<\/p>\n
\"Resolving private debt takes time, and please note that (the
\nhelp of the Jakarta Initiative) is voluntary ... so it's slow,\"
\nIrzan said.<\/p>\n
Joseph said 284 companies with an outstanding total debt of
\n$23.2 billion and Rp 15.6 trillion had enlisted the aid of the
\nJakarta Initiative. Of this number, 27 firms with an outstanding
\ntotal debt of $3.3 billion and Rp 2.3 trillion have reached debt
\nrestructuring agreements.<\/p>\n
The president of PT BII Finance Center, a unit of Bank
\nInternational Indonesia, Artine S. Utomo, praised the work of the
\nJakarta Initiative. She said the task force helped her company
\nrestructure more than $62 million in syndicated loans owed to 18
\nbanks.<\/p>\n
\"Debt negotiations are extremely difficult. They really can
\ncome to a deadlock; it's unavoidable,\" she said.<\/p>\n
She said that as a neutral party, the Jakarta Initiative was
\nable to restart stalled negotiations with creditors.<\/p>\n
Publicly listed heavy equipment manufacturer PT Intraco Penta
\nalso acknowledged the importance of the Jakarta Initiative Task
\nForce in resolving the deadlocked negotiations over its $44.17
\nmillion in debt. (rei)<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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