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

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)