Anwar Sierad needs more time for debt deal

JAKARTA (JP): In an effort to avoid being declared bankrupt, publicly listed Anwar Sierad asked the Jakarta Commercial Court on Monday to grant an extra 45 days for the company to continue negotiations with its creditors, a lawyer said.

Marselina Simatupang of Lucas and Partners, representing one of the creditors, added that the court would decide on Thursday whether to grant the request.

"This is not the right legal procedure based on the 1998 Bankruptcy Law. Anwar Sierad should seek approval from the majority of creditors for an extension, not from the court," she said.

She said Anwar Sierad had failed to reach a debt restructuring deal with its creditors by Monday's deadline, thus it should be declared bankrupt unless the majority of creditors vote otherwise.

"The creditors do not understand what is going on. We though we were in court today to vote as stipulated in the Bankruptcy Law," she complained.

Anwar Sierad was expected to complete the restructuring of its US$160 million debt within seven and a half months starting from September as part of the court's suspension of payment (PKPU) procedure.

The seven-and-a-half-month period elapsed on Monday without a debt restructuring agreement between Anwar Sierad and its creditors.

A suspension of payment request, according to the Bankruptcy Law, allows a company facing a bankruptcy suit to postpone the suit by filing a PKPU request with the court, subject to the majority of creditors' approval.

In the suspension of payment procedure, the time given to a company to negotiate a debt restructuring deal with its creditors can be extended to a total of 270 days.

If the suspension of payment period ends without a debt restructuring deal in place, by law the borrower is automatically declared bankrupt.

Anwar Sierad's finance director Awi Tantra was earlier reported as saying the company had a debt restructuring proposal which involved a combination of a debt-to-equity swap (70 percent of total debts) and debt rescheduling (30 percent).

The debt restructuring proposal, according to the law, has to be approved by two-thirds of the total of creditors, which represent at least 50 percent of the total value of the debts.

The company's five biggest creditors representing 50 percent of its total debts are the Indonesian Bank Restructuring Agency (IBRA), PT Rabobank Duta Indonesia and Rabobank Asia of Singapore branch, the Deutsche Bank AG of Germany and Hongkong Shanghai Banking Corporation.

Anwar Sierad -- 50.01 percent owned by PT Sietek Nusantara Finance and the rest by the investing public -- is involved in chicken hatcheries, producing chicken feed and trading in poultry farm equipment. (udi)