Bakrie in talks to reach debt restructuring accord
Bakrie in talks to reach debt restructuring accord
JAKARTA (JP): Publicly listed PT Bakrie & Brothers said
yesterday that it expected to reach an agreement with its
international creditors by the end of 1998 to restructure its
US$1.2 billion of overseas debt.
"Talks are still going on with the foreign creditors and a
solution is expected by the end of the year," finance director
Nalinkant Rathod told reporters following a general shareholders
meeting.
He said that although most creditors wanted to be repaid as
soon as possible, it would be difficult to satisfy them all due
to the sharp fall in the rupiah.
The rupiah has plunged from Rp 2,450 against the U.S. dollar
in July to about Rp 15,000.
Rathod said that some $400 million of the debt was in bonds
while the remainder was in syndicated loans.
He also said that $450 million of the debt was hedged,
minimizing the forex losses resulting from the sharp fluctuation
in the rupiah's value.
Bakrie & Brothers is a diversified group with core businesses
in agribusiness, infrastructure support, and telecommunications.
The group also has investments in strategic sectors.
Bakrie ruled out issuing a dividend for the calender year 1997
due to the company's poor performance during the year, which saw
a loss of Rp 283.9 billion, compared to a net profit of Rp 187.1
billion in 1996.
The agribusiness and infrastructure divisions booked a net
profit of Rp 26.4 billion and Rp 80.1 billion respectively.
But the telecommunications and strategic investment divisions
contributed a losses of Rp 334.7 billion and Rp 55.8 billion
respectively.
Performance
The poor performance mainly resulted from the write-off of
investments in 30 incomplete projects that were not viable or
canceled by the government as a result of the economic crisis,
Bakrie said in a statement.
It added that various trade receivables that had to be written
off, mainly from the Ratelindo telecommunications fixed-line
provider, also contributed to the loss.
Many telephone lines had to be terminated as a result of
customers not being able to pay their bills amid the economic
hardships, it explained.
Yesterday's shareholders meeting also appointed a new
president, Irwan Sjarkawi, the former president of state-owned
trading company PT Pantja Niaga.
Irwan replaces Tanri Abeng, who was appointed state minister
of the empowerment of state enterprise in May.
Irwan said that part of the efforts to survive the economic
crisis was to sell or divest the firm's stake in several
subsidiaries.
He wouldn't provide details of the plan but said the company
was still looking for buyers.
Rathod said that proceeds from the sale of the stake might be
used to pay off Bakrie's foreign debts.
The diversified group has not yet decided whether to join the
scheme offered by the government-backed Indonesian Debt
Restructuring Agency (INDRA) to deal with its foreign debt
problem. In the meantime it will continue negotiations with the
help of its financial advisor Chase Manhattan.
"We're still waiting for the details (of the INDRA scheme),"
Rathod said.
INDRA was established early last month to provide a scheme to
assist the country's debt-ridden companies deal with their
overseas debts. The agency will start operating on August 1.
Assurance
Under the scheme, agreed with foreign lenders in Frankfurt on
June 4, INDRA will provide debtors with foreign exchange
protection and assurance of the availability of the foreign
exchange. This agency will assume the full exchange risk of
dollar-denominated debt repayments but will not provide any
bailout for the private debts.
The international creditors agreed to restructure $60 billion
of the country's private sector foreign debt for eight years,
including a three-year grace period.
Analysts, however, said that despite the Frankfurt agreement,
companies would still have difficulties paying their overseas
debts due to the rupiah's continued plunge and the effects of the
shrinking economy.
They said creditors should cut the principal by 30
percent. (rei)