Bambang prods major debtors to pay up

JAKARTA (JP): Finance Minister Bambang Subianto met owners of the 200 largest indebted companies including Mohammad Bob Hasan and Aburizal Bakrie on Saturday in a final round of efforts to push them to sign a loan recovery agreement.

Deputy chairman of the Indonesian Bank Restructuring Agency (IBRA) Eko S. Budianto said the move was part of a series of steps implemented to recover between Rp 60 trillion to Rp 70 trillion (US$8.75 billion) in non-performing loans (NPLs) owed by the debtors to domestic banks.

He said that debtors were expected to sign a "letter of commitment" on June 22.

He explained that the letter of commitment contains a 4-point provision including an agreement to be fully transparent to allow the agency to audit the real condition of the debtors and design a debt restructuring program and an agreement to make divestments in case debtors lack cash to make repayments.

"We want to encourage them to work fast because we have set August 30 as the deadline before we take unpopular steps," he told reporters following the closed door meeting.

Bambang wasn't able to be reached for comment.

Eko said the debtors must have already reached a final debt restructuring agreement with the government by the deadline or they would face litigation measures.

Eko dismissed rumors that the letter of commitment would bind the debtors to hand over personal assets to repay debts.

"There's no way we can do that if the credit agreement doesn't include personal assets as collateral," he pointed out.

"The debtors thought that we're going to confiscate personal assets if they sign the letter of commitment. But we've explained this to them and they understand," he said.

He said that two indebted companies, shipping group PT Humpuss Intermoda and container operator PT Humpuss Peti Kemas, immediately signed the letter of commitment after the meeting.

Humpuss is the holding company of Tomy Hutomo Mandala Putra, the youngest son of Indonesia's former president Soeharto.

Eko said that debtors who declined to sign the letter of commitment would risk having names published in newspapers.

IBRA announced early this month the names of the 200 most indebted companies, which include those belonging to the cronies and family of former president Soeharto.

Most of the large NPLs are believed to be owed by the debtors to state banks.

The debt restructuring process has been very slow particularly as most of the worst debtors are companies belonging to well- connected businessmen.

Government officials had quietly admitted that IBRA was finding difficulty in getting a real picture of the indebted companies as the debtors declined to be transparent.

But after Saturday's meeting, the debtors claimed that they would sign the letter of commitment.

"I think it's fair and just. We really welcome this positive step so that we can have a way out (of the debt problem)," said Mohammad Bob Hasan, a long time golfing partner of Soeharto.

Benny Soetrisno, president of textile maker PT Apac Inti Corpora, concurred.

"And the meeting was a positive step as well. Debtors now realize that IBRA is not a slaughterhouse," he said, referring to IBRA's plans to liquidate indebted companies which fail to make debt repayment.

Aburizal Bakrie, chairman of the Bakrie Group said the government told the meeting that the focus was to restructure indebted companies not to liquidate them to prevent further layoffs.

"The government wants to solve (debtors) problems not make them bankrupt," he said.

"So I think it is fair for the government to demand the debtors to be open," he added.

But Aburizal, who's also chairman of the Indonesian Chamber of Commerce and Industry, asked the government to delay the August deadline as debtors would need a longer adjustment time to accept the fact that they would become minority shareholders as a result of a debt-to-equity swap restructuring option.

"They need more time to change their mentality," he pointed out. (rei)