Mandiri settles Kiani debt restructuring<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
State Bank Mandiri, the nation's largest bank in terms of assets,
\nhas ended lengthy negotiations over the settlement of its massive
\nloans in troubled pulp and paper producer, PT Kiani Kertas, after
\nboth agreed to sign a restructuring agreement.<\/p>\n
Bank Mandiri president director ECW Neloe said on Wednesday
\nthe bank had just signed a restructuring deal on Dec. 27 with
\nKiani after the firm's new investor, Singapore-registered Novela
\nInternational, had injected US$50 million in working capital into
\nthe firm to improve its business operations.<\/p>\n
The capital is needed to help revive Kiani's business so that
\nit can pay its $201 million debt to Mandiri.<\/p>\n
\"The restructuring deal has been signed. We are now waiting
\nfor Kiani to improve its performance and start paying its debt to
\nus. Otherwise, we will seize their assets,\" said Neloe.<\/p>\n
He added that the restructuring agreement included an
\nextension of three years for Kiani to settle its entire debt to
\nMandiri, with an interest of 6.5 percent annually. The deal would
\nalso allow Kiani to pay the entire principal on the last year of
\nthe deal.<\/p>\n
\"Normally restructuring takes about five years, not three
\nyears. We have proposed to the central bank for a possible
\nextension for Kiani to restructure in order to give them some
\ntime to improve its performance,\" he said.<\/p>\n
Due primarily to Kiani's bad loans, Mandiri's gross non-
\nperforming loans (NPL) ratio remains high at 7.2 percent as of
\nSeptember last year, compared to the central bank's 5 percent
\nlimit.<\/p>\n
Neloe said if Kiani failed to pay its debt by the given
\ndeadline, Bank Mandiri would ask the company to sell its assets,
\nor to authorize the bank to sell them to cover the debt.<\/p>\n
At present, the bank is still auditing Kiani assets, which are
\nestimated to be valued at about Rp 3 trillion.<\/p>\n
Bank Mandiri was ordered by the now-defunct Indonesian Bank
\nRestructuring Agency (IBRA) in 2002 to team up with Prabowo
\nSubianto, former son-in-law of former president Soeharto, to take
\nover Kiani's debts. Kiani was once controlled by tycoon Mohammad
\n\"Bob\" Hasan, a crony of Soeharto.<\/p>\n
Neloe also said that the bank was planning to allocate some Rp
\n2.7 trillion (US$300 million), or about 15 percent of the bank's
\nRp 18 trillion lending expansion for this year, to help finance
\nthe construction of infrastructure for the business community.<\/p>\n
The government will form a consortium, consisting of state
\nbanks, to help channel loans to finance the construction of 1,500
\nkilometers of toll roads that would link Merak in Banten with
\nBanyuwangi in East Java.<\/p>\n
The toll roads are expected to help prevent massive
\ntransportation congestion in 2008, which disrupts the
\ndistribution chain of goods in Java.<\/p>\n
The government is expected to construct some 300 kilometers of
\ntoll roads per year, with an annual investment as high as Rp 30
\ntrillion.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/mandiri-settles-kiani-debt-restructuring-1447893297",
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