Bank Mandiri unfazed by Semen Padang's threat

Bank Mandiri unfazed by Semen Padang's threat

The Jakarta Post, Jakarta

Despite a lawsuit threat, state Bank Mandiri insisted on Tuesday
it would not lend cementmaker PT Semen Padang the money it needed
to repay maturing debts unless the company obtained approval from
its parent company, PT Semen Gresik.

"Prior to releasing the funds, Bank Mandiri has the right to
cancel the loan disbursement," said the bank's corporate
secretary Koen Sardjono Sadrie in a media statement.

The statement came following an earlier threat from Semen
Padang lawyer Adnan Buyung Nasution that the company would sue
Bank Mandiri for reneging on its commitment to lend the company
some Rp 500 billion (US$55 million). The loan was initially
approved in June.

The West Sumatra-based Semen Padang, which is 99.99 percent
owned by state-owned Semen Gresik, has said that it does not
require shareholder approval to borrow money.

Semen Padang, which needs the loan to repay debts, is required
to pay Rp 224 billion in six-month-term notes to state-owned
social security firm Jamsostek and some Rp 270 billion to ABN
Amro Bank due on Aug. 20.

Semen Padang could eventually be declared bankrupt if it
defaults on the loans.

The company is seen as a rebellious subsidiary of Semen Gresik
as it has been campaigning for a total spin off from the parent
company since 2000 as part of efforts to foil attempts by the
central government to privatize the state-owned cement operation.

Some reports have quoted Semen Padang officials as saying that
the decision by Bank Mandiri to suspend the loan disbursement was
made following intervention from senior officials at Semen
Gresik.

There has also been speculation that the Office of the State
Minister of State Enterprises could be behind the Bank Mandiri
loan suspension.