Task force restructures US$3.04b in corporate debt<\/p>\n
JAKARTA (JP): The Jakarta Initiative Task Force has completed
\nrestructuring a total of US$3.04 billion in corporate foreign
\ndebt at 24 local companies, including $1.2 billion owed by Bakrie
\n& Brothers, according to the task force's chief operating officer
\nJoseph Luhukay.<\/p>\n
He said on Friday the Bakrie & Brothers conglomerate was
\nscheduled to sign a debt restructuring deal with some 300
\ncreditors next week.<\/p>\n
Luhukay said the total amount of debt restructured so far was
\nsmall compared to the $21.3 billion in debt owed by the more than
\n200 companies which registered with the task force for assistance
\nin restructuring their debts.<\/p>\n
He said the main problem encountered by the task force in
\nfacilitating the restructuring of the debts, particularly
\ncorporate foreign debts, was the complexity of the debts, which
\ncould involve hundreds of creditors for a single company.<\/p>\n
\"It may need between one year and one and a half years to
\nrestructure large debts,\" he said.<\/p>\n
Luhukay dismissed concerns the Bank Bali scandal would
\nfurther slow the debt restructuring program.<\/p>\n
\"It's business as usual for us,\" he said, declining to
\nelaborate further.<\/p>\n
Restructuring corporate debt overhang is seen as a crucial
\nstep toward the country's economic recovery.<\/p>\n
Some 2,200 companies in the private sector have a total of
\nsome $67 billion in foreign debt and Rp 300 trillion ($40
\nbillion) in domestic debt.<\/p>\n
The task force was established in September 1998 to serve as a
\nfacilitator in encouraging debtors and creditors to reach an out-
\nof-court debt settlement.<\/p>\n
The government hired some 20 foreign debt restructuring
\nexperts in July to help expedite the debt restructuring process.<\/p>\n
Luhukay said the foreign experts would begin working next
\nmonth.<\/p>\n
Most local companies stopped servicing and repaying their
\ndebts after the rupiah plunged to as low as 17,000 against the
\nU.S. dollar last year. It was at Rp 2,450 before the economic
\ncrisis hit in July 1997.<\/p>\n
The rupiah has stabilized to between 6,500 and 8,000 over the
\npast several months, but this stabilization has seemingly failed
\nto encourage local companies to seek a debt restructuring deal.<\/p>\n
Bank Indonesia deputy governor Miranda Goeltom aired this
\nconcern last week during a seminar.<\/p>\n
She said that despite a few successful debt restructuring
\ndeals, a lack of coordination among economic and banking
\nauthorities made the debt restructuring process move very slowly.<\/p>\n
\"This is causing great concern over the amount of foreign debt
\nthat will fall due in the very near future,\" Miranda said,
\nhighlighting the serious impact a stronger demand for the dollar
\ncould have on the rupiah's exchange rate.<\/p>\n
IBRA<\/p>\n
In a related development, Indonesian Bank Restructuring Agency
\n(IBRA) deputy chairman Eko S. Budianto said on Friday that 26 of
\nthe country's 200 largest debtors, who between them have some Rp
\n70 trillion in nonperforming loans at domestic banks, had not
\nsigned a letter of commitment (LoC) with IBRA.<\/p>\n
A letter of commitment contains an agreement stating that a
\ndebtor will cooperate with IBRA in finding ways to restructure
\ntheir debts to local banks.<\/p>\n
Under the government's bank recapitalization program,
\nindividual nonperforming loans of over Rp 5 billion must be
\ntransferred to IBRA.<\/p>\n
Eko said if the 26 debtors failed to demonstrate their
\ncooperation by the Aug. 31 deadline, IBRA would take them to
\nCommercial Court for bankruptcy proceedings, confiscate their
\nassets and disclose their names to the public.<\/p>\n
\"If they decline to sign the LoC by the deadline, we will
\nsurely take legal action,\" he said before launching a public
\nauction of assets held by IBRA.<\/p>\n
The 200 largest debtors mainly comprise companies owned by
\npolitically well-connected businessmen, including the children of
\nformer president Soeharto. (rei\/04)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/task-force-restructures-us304b-in-corporate-debt-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}