Bakrie's rubber dealer Lewis & Peat goes under
Bakrie's rubber dealer Lewis & Peat goes under
JAKARTA (JP): Natural rubber dealers Lewis & Peat Singapore
and Lewis & Peat London, parts of the Bakrie Group, have decided
to declare themselves bankrupt after failing to reach an
agreement with their creditors, led by Rabobank, to rollover
their due debt of US$60 million.
PT Bakrie Sumatera Plantations (BSP), which owns the two
companies, said on Tuesday that the management of Lewis & Peat
had also failed to find a strategic partner to save them from
bankruptcy.
As a consequence of the bankruptcy decision, BSP said, all
assets of Lewis & Peat (London and Singapore) would be up for
sale, including their open positions in the commodity bourses
which would result in losses from the unrealized gains of $6
million.
Earlier, Lewis & Peat Connecticut, also a unit of BSP, filed
"Chapter 11" bankruptcy in the United States.
The three Lewis & Peat companies form the Lewis & Peat Group.
BSP said the bankruptcy of the Lewis & Peat Group would
automatically write off all of its capital in the rubber dealer
group.
In addition, BSP would have to book a provision of Rp 60
billion ($8.2 million) for the carrying value of its investment
in Lewis & Peat Singapore and London.
BSP would also have to book another provision of Rp 50 billion
to cover the current obligations of Lewis & Peat Connecticut.
Those provisions will be reported in the company's 1999 profit
and loss statement.
"However, those losses will not affect the company's cash flow
because the company has a lot of capital to cover the losses,"
BSP said.
BSP added that the bankruptcy of the Lewis & Peat Group would
even benefit the company because it would be able to sell its
rubber directly to its customers.
The Lewis & Peat Group sold around 25 percent of BSP's rubber
last year.
However, BSP's consolidated sales would be affected by Lewis &
Peat's bankruptcy decision.
Nevertheless, in the longer term, the disappearance of the
Lewis & Peat Group from BSP's revenue consolidation would improve
the company's profitability.
It noted that Lewis & Peat's profit margin was only between 2
to 3 percent, compared with BSP's profit margin of between 50
percent and 60 percent.
The Lewis & Peat group has been profitable for the last three
to four years, but ran aground late last year after an audit
revealed the use of short-term credit funds to finance long-term
projects.
The Lewis & Peat group is independently financed by a
syndicate group of banks.
As such, it will not be affected by the debt-for-equity swap
that the Indonesian Bank Restructuring Agency (IBRA) helped to
negotiate for the ailing Bakrie group. (rid)