Bakrie plays down concerns over its restructuring plan

JAKARTA (JP): Chairman of the well-diversified PT Bakrie & Brothers Aburizal Bakrie played down on Monday concerns by the U.S. Exim Bank over the transparency of the business group's US$1.02 billion debt restructuring plan.

Aburizal said the U.S. bank's concerns would not affect the debt restructuring program which in principal was approved by most of its creditors.

"The Exim Bank concern was issued before the meeting took place. And the bank didn't take a vote," he said on the sidelines of a seminar on the economy.

Aburizal said the company had already reached an agreement in principle with two-thirds of the creditors attending the April 20 informal meeting to restructure its debts through a debt-to- equity swap scheme.

He said the meeting was attended by 69 percent of the company's creditors, which means decisions were made by the necessary quorum.

Aburizal said on Monday that a final agreement on the debt restructuring plan was expected to be reached in August as initially scheduled.

The U.S. Exim Bank issued a letter on April 9 to Bakrie's creditors expressing concerns over the transparency of the company's debt restructuring plan.

The bank demanded an "investigative accountant" to assist in evaluating Bakrie's financial position.

"Bakrie & Brothers has been insufficiently cooperative in disclosing information about its current and past business and financial activities," the bank said.

Dow Jones reported that the bank "conservatively estimated" Bakrie's debt plan would only yield lenders between "6 to 7 cents on each dollar".

The Exim Bank is owed $75 million by PT Ratelindo, a telecommunications unit of Bakrie & Brothers.

The Bakrie debt restructuring plan will be implemented through a massive debt-to-equity swap that will result in five Bakrie subsidiaries being placed into a holding company 80 percent owned by the creditors. The lenders will also hold 30 percent in Bakrie & Brothers' subsidiaries.

Exim Bank said the holding company arrangement might be inadequate, as the Bakrie family itself would maintain significant influence over many of its interests.

The holding company would hold only a minority equity interest in most of Bakrie's operating subsidiaries, the bank said.

Bakrie is one of the few companies which has been progressing in debt negotiations with foreign creditors.

Businessmen said debt restructuring agreements reached by several private companies with their foreign creditors would be sufficient to reassure foreign banks to resume lending activities in the crisis-hit economy.

Indonesia has some $64 billion in private sector overseas debts.

Other companies which have been progressing positively with their debt restructuring process include state-owned fund management firm PT Danareksa, conglomerate PT Astra International, petrochemical firm PT Polysindo Eka Perkasa and PT Mulia Industrindo. (rei)