Bakrie to complete debt restructuring in September

Bakrie to complete debt restructuring in September

JAKARTA (JP): The widely diversified PT Bakrie & Brothers is
set to complete the restructuring of its US$1.02 billion debt in
September this year, the business group's top executive said here
on Thursday.

Company president Irwan Sjarkawi said auditors were now in the
final stages of the due diligence on the proposed debt-to-equity
swap.

"The auditors are still working hard on the due diligence. We
are expecting it to be finalized in the next three to four
weeks," he said following the business group's shareholders
meeting.

The company earlier announced it had reached an agreement in
principle with its creditors to restructure its debt through a
debt-to-equity swap.

The restructuring involves the establishment of a Master
Special Purpose Vehicle company, through which creditors will
take over 80 percent of Bakrie & Brothers' shares in five of its
subsidiaries.

In addition, this new company will own 30 percent of Bakrie &
Brothers through the issuance of new shares on a fully diluted
basis.

The main aim of the debt restructuring is to ensure the
company's assets are not sold in the current depressed market,
Sjarkawi said.

He said eight of Bakrie's subsidiaries, including PT Bakrie
Pipe Industries, PT Southeast Asia Pipe Industries, PT Seamless
Pipe Indonesia Jaya, publicly listed PT Bakrie Sumatera
Plantations, PT Bakrie Tosanjaya, PT Bakrie Building Industries
and PT Bakrie Corrugated Metal Industries, were currently
undergoing debt restructuring.

He said both Bakrie and its subsidiaries' debts, amounting to
around $570 billion and $500 billion, respectively, should
immediately be restructured to enable the company to continue its
operations and enhance its future performance with a sustainable
level of debt.

"Bakrie & Brothers' debt will be zero after the finalization
of the debt restructuring, meaning that the company will then be
ready to begin in a much better condition," he said.

He said the company was upbeat its debt restructuring program
would proceed smoothly.

Sjarkawi said Bakrie ended 1998 with a consolidated net loss
of Rp 2.18 trillion, compared to a net loss of Rp 283.9 billion
in 1997.

"The 1998 deficit was due mainly to a substantial increase in
foreign currency losses along with a consequent rise in net
interest costs," he said.

He said losses resulting from the weaker rupiah jumped to Rp
2.08 trillion in 1998 from Rp 53.1 billion in 1997, while net
interest expenses surged to Rp 849.9 billion last year from Rp
105.4 billion in 1997.

The shareholders approved during the meeting the group's
proposal not to pay dividends for the 1998 financial year due to
the company's losses.

However, Bakrie reported the company's consolidated revenue
increased by 79 percent in 1998 to Rp 3.52 trillion from Rp 1.96
trillion in 1997.

Of the total revenue, the company's agribusiness contributed
60.2 percent (Rp 2.13 trillion), followed by infrastructure
support with 27.4 percent (Rp 971.9 billion) and
telecommunications with 12.4 percent (Rp 439.4 billion).

Agribusiness experienced the highest increase in revenue,
rising around 159 percent from the Rp 825 billion booked in 1997.

The increase was the result of improved sales volume by the
Lewis & Peat group of trading companies and by Bakrie's oil palm
subsidiaries.

The company's telecommunications business saw its revenue
decline by 5 percent last year from Rp 462.4 billion in 1997.

The drop was mainly caused by a decrease in sales of its fixed
wireless business under PT Radio Telepon Indonesia (Ratelindo),
whose revenue fell to Rp 81.5 billion last year from Rp 104.1
billion in 1997. (cst)