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)