Bakrie's stake in Bakrie & Brothers to shrink to 2.5%

JAKARTA (JP): The Bakrie family will see their ownership in the widely diversified Bakrie & Brothers to decline to 2.5 percent from 55 percent at present once the company's debt restructuring program is completed.

Aburizal Bakrie, the current majority shareholder of the business group, said on Monday that under the debt restructuring program, foreign creditors would take up 95 percent of his family's equity in Bakrie & Brothers in exchange for the business group's debts, worth US$1.05 billion.

"It's the worst consequence of the program: my ownership will flop to only 2.5 percent from 55 percent, although that'll not be a problem for me," he said on the sidelines of an extraordinary general meeting of the company.

Aburizal, who resigned from the company in 1997, was reappointed as chief commissioner during the meeting, which also discussed the finalization of the debt restructuring program.

Company president Irwan Syarkawi said the debt restructuring program covered the debts of Bakrie & Brothers and five other firms, namely plantation firm Bakrie Sumatra Plantation, telecoms operator Bakrie Elektrindo Company, mining firm Arutmin Indonesia, chemical firm Bakrie Kasei Corporation and satellite- based firm Iridium.

He said that upon the finalization of the program, foreign creditors would also own 95 percent of the Bakrie family's stake in each of the five companies.

The company was currently seeking government approval regarding the transfer of the Bakrie family's ownership to foreign creditors, he said.

"Our creditors want an assurance from the government before they sign the debt restructuring agreement to avoid unwanted problems in the future," he told a media conference after the meeting.

Irwan said it was necessary to obtain the government's assurance that the transfer of equity and assets, which would make foreign partners the majority shareholders, was not contradictory to regulations.

He said current government's regulation restricted foreign firms from having majority ownership in local companies that operated in certain sectors, such as mining and plantation.

In the mining sector, for example, the government allows foreign companies only up to 49 percent. Foreign companies with majority ownership are required to sell their stake under a mandatory divestment program.

He said the company had obtained approval from the Indonesian Bank Restructuring Agency (IBRA) for the debt restructuring plan. "The company is still involved in talks with the minister of energy and mineral resources and the minister of agriculture and forestry to obtain similar approval," he added.

Aburizal said he expected the debt restructuring program to be finalized by the end of September, or early October at the latest.

He said a rights issue, as part of the debt restructuring plan, would likely be held some time in October, after creditors had signed the debt restructuring agreement. (cst)