Kanindo finally acquired<\/p>\n
It was widely predicted that the business consortium led by
\nBambang Trihatmodjo, chairman of the widely-diversified Bimantara
\nconglomerate, would end up as the new owner of the debt-ridden
\nKanindo textile group. That prediction had prevailed since early
\nthis year despite the strong lobbying by the finance minister,
\nthe Indonesian Chamber of Commerce and Industry and even the
\neconomics department of the ruling Golkar political group to have
\nthe textile group temporarily under the management and control of
\nthe Batik Cooperatives Association (GKBI) take it over.<\/p>\n
In spite of all of the official pronouncements about the high
\npriority of the development of cooperatives as one of the
\nbackbones of the nation's economy, the contest for the takeover
\nof the Central Java-based textile group took an unusual path as
\nsoon as the politically well connected consortium entered the
\npicture.<\/p>\n
There were, we think, at least two important factors that
\ndetermined the success of the bid from Bambang's consortium.<\/p>\n
First, as soon as the consortium entered the game and its
\nmembers were disclosed, no other interested investors dared to
\nsubmit bids. That was not because other businessmen were
\nprohibited from submitting competitive bids. Nor was it due to a
\ntotal lack of commercial viability on the part of the Kanindo
\ngroup. The group turned out to be highly profitable under the
\nmanagement of GKBI, which managed the company from last September
\nunder a contract with the creditors. It was more a result of the
\nway the business community perceives the business scheme of
\nthings specific to Indonesia.<\/p>\n
The question then is whether the deal concluded by the state
\nbanks with the new owners was fair, given the restrictions
\nencountered with regard to the sole bidder. Anyway, given the
\nstature of the consortium members, even the managements of the
\nstate banks had little leverage in the bargaining process.<\/p>\n
The position of the two state banks -- Bank Bumi Daya and the
\nDevelopment Bank of Indonesia -- also seemed rather weak when
\nKanindo's bad loans were set against the backdrop of the
\nquestionable ways in which they had extended almost Rp 1 trillion
\n(US$450 million) in credit to a single group controlled by a
\nbusinessmen who had once been convicted of car smuggling.<\/p>\n
The second factor, we reckon, is the blunt fact that only a
\nfew businessmen in the country are capable of raising a large
\nenough amount of fresh funds for the acquisition. Bimantara is
\none of the few. Yet questions still remain as to how the
\nconsortium could have raised such a large sum of fresh funds
\nbecause the companies owned by the consortium's members are all
\nprivate concerns which are not subject to financial disclosures.<\/p>\n
Even though many might question whether the terms of the debt
\nrescheduling, including annual interest of only 11 percent, which
\nis way below the market rates today, are fair to the state banks,
\nthe takeover deal has at least saved the banks from much bigger
\nlosses.<\/p>\n
The Development Bank of Indonesia, for example, has not been
\nable to collect the estimated $620 million in loans it extended
\noutside of normal credit procedures to Eddy Tansil of the already
\nbankrupt Golden Key group. This loan scandal led to the
\nimprisonment of the bank's directors and Eddy himself.<\/p>\n
Hopefully, what has been agreed by the Bambang-led consortium
\nand the two state banks will be implemented fully. Even though
\nthe deal may not be the best for the state banks, it will release
\na large sum of lending resources back to the creditors. Thousands
\nof small and medium-scale businesses can then benefit from the
\nnew funds available at the two state banks.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/kanindo-finally-acquired-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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