Marubeni Corp. insists on old Chandra Asri debt restructure plan<\/p>\n
JAKARTA (JP): Japan's Marubeni Corp. has insisted the
\ngovernment honor the old debt restructuring agreement with
\npetrochemical giant PT Chandra Asri, according to Chairman of the
\nIndonesian Bank Restructuring Agency (IBRA) Edwin Gerungan.<\/p>\n
Edwin said here on Thursday that IBRA had proposed a new debt
\nrestructuring plan which included a lower interest rate, longer
\nmaturity period, and greater equity participation in Chandra Asri
\nby the Japanese lender.<\/p>\n
\"But they still demand the old MoU ... It's a tough
\n(negotiation),\" he told reporters, referring to the Memorandum of
\nUnderstanding reached by the government and Marubeni in June
\n2000.<\/p>\n
\"But we'll continue to negotiate ... We don't want to return
\nto the old MoU,\" he added.<\/p>\n
IBRA resumed negotiation with Marubeni earlier this week.<\/p>\n
Chandra Asri owes around US$700 million in debt to a foreign
\nconsortium led by Marubeni. The petrochemical firm also owes
\naround Rp 3 trillion to IBRA.<\/p>\n
Under the existing MoU, Marubeni would convert around $100
\nmillion of its loan into equity in Chandra Asri, while the
\ngovernment via IBRA would convert the local debt into an 80
\npercent equity.<\/p>\n
Marubeni also agreed to give Chandra Asri 12 years to repay
\nthe foreign debt with an interest rate of 2.5 percentage points
\nabove Libor (London Interbank Offering Rate).<\/p>\n
But the Financial Sector Policy Committee (FSPC), which
\noversees major corporate restructuring in the country, changed
\nits mind following criticism that the government was exposed to
\ncovering future liabilities of Chandra Asri with its majority
\nownership in the company.<\/p>\n
The FSPC, which groups several senior economic ministers,
\nmanaged to force Chandra Asri founder Prajogo Pangestu to
\nsurrender personal assets as part of a new restructuring plan for
\nthe local debt. Under the new plan, Prajogo would have a 49
\npercent stake in Chandra Asri, while IBRA would have a 31 percent
\nstake.<\/p>\n
Prajogo has surrendered ownership in some 20 companies to
\nIBRA, but ownership in three companies, including pulp producer
\nPT Tanjung Enim Lestari, timber company PT Musi Hutan Persada,
\nand publicly-listed timber giant PT Barito Pacific has been
\npledged to other foreign creditors by Prajogo.<\/p>\n
After due diligence, the FSPC finally agreed to a second
\nmortgage on the three assets, whereby the remaining proceeds from
\nthe sale of the assets would be pledged to IBRA.<\/p>\n
After reaching a new agreement with Prajogo, FSPC then pushed
\nIBRA to seek a new agreement with Marubeni.<\/p>\n
The June MoU expired at the end of last year. But in November,
\nMarubeni expressed agreement to lower the interest rate of the
\nChandra Asri foreign debt to 1.5 percentage points above Libor.<\/p>\n
However, the government still insists on a rate equal to
\nLibor.<\/p>\n
The government has also demanded Marubeni take a greater
\nequity position in Chandra Asri, currently operating in the red.<\/p>\n
Chandra Asri has been a controversial company since
\nconstruction started on its petrochemical plant in the early
\n1990s.<\/p>\n
Chandra Asri founders, which include a son of former president
\nSoeharto, somehow managed to convince state-owned banks to
\nfinance the project, located in West Java's Cilegon industrial
\ncity, without proper analyses of the business plan.<\/p>\n
Several Japanese lenders including Bank of Tokyo-Mitsubishi,
\nFuji Bank and JICA joined Marubeni to help finance the project.<\/p>\n
But the Asian financial crisis that started in the middle of
\n1997 catapulted Chandra Asri into deep financial trouble.(rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/marubeni-corp-insists-on-old-chandra-asri-debt-restructure-plan-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}