Bankers expect deal on RI's corporate debts

Bankers expect deal on RI's corporate debts

NEW YORK (Agencies): International bankers meeting in New York with a high level Indonesian delegation are hoping to come to an agreement on some sort of working plan to address the country's US$67.6 billion corporate debts by Thursday.

But they caution that any accord reached will be very general and will only provide guidelines for what promises to be difficult negotiations.

"We want to come up with a framework that will tell us how to proceed and provide a timetable," a banking source close to the negotiations told Dow Jones Newswires.

Central to the plan would be organizing the banks participating in the negotiations into working committees that will be able to examine different aspects of the economic crisis affecting the country.

"We need to take a broad base approach and look at a lot different aspects. This isn't a private sector committee, but an Indonesian bank committee," a banker familiar with the negotiations said.

After adjourning their talks Wednesday evening following a day of presentations by the International Monetary Fund and the country's finance minister, among others, the banks and the Indonesian delegation led by former finance minister Radius Prawiro, the head of President's Suharto's private external debt team, will reconvene Thursday morning at the world headquarters of Chase Manhattan Bank Corp which has been hosting the show.

During Wednesday's meetings, Marc Walker, of the law firm Cleary, Gottleib, Steen & Hamilton, Indonesia's legal counsel and a veteran of debt negotiations, presented bankers with an 4-page document outlining how the country would like to deal with its private corporate debt problem.

Bankers said the proposal was similar to the program adopted by Mexico in 1993 to provide foreign exchange insurance to private companies to relieve them, as least partially, from their foreign-currency denominated debt by freezing its size in local currency terms.

Described as "just a starting outline, not a proposal," by a banker, the Indonesian's plan offers fewer options than the Mexican Ficorca framework.

Among issues needing to be hammered away are the key points of what exchange rate will be chosen for the rupiah, what debt will be eligible for the program and what entity will govern it.

"The only thing for sure is that it will be voluntary and will require the consent of both the debtor and the creditor," a banking source familiar with the document said.

Bankers said they might agree to forgive a small portion of Indonesia's total debt in the event the participants reached a satisfactory restructuring of the remaining obligations.

The bankers said they expect further talks to take place no sooner than a month from now, once the lenders and debtors have agreed on terms for further negotiations.

IMF's Deputy Managing Director Stanley Fischer left the talks early Wednesday after making a presentation of an overview of the latest IMF program for Indonesia.

He expressed confidence in the seriousness of the participants involved in the talks, but stressed that a resolution would take some time.

The bank steering committee is co-chaired by the U.S.'s Chase Manhattan Bank Corp, Germany's Deutsche Bank AG and Japan's Bank Of Tokyo-Mitsubishi.

Leaving the meeting after addressing the bankers midday, Bank Indonesia's Governor Sjahril Sabirin said his country was fully committed to achieve foreign exchange stability and aimed at getting the rupiah below the 6,000-to-the-dollar level to bring the exchange rate "more in line with the strength of Indonesia's economy."

In addition to Prawiro, the Indonesian delegation includes Anthony Salim, a member of the 'contact committee' representing Indonesia's corporate borrowers; Djakaria, director of Bank Indonesia; Ending Fadjar, deputy director of Bank Indonesia; Glenn Yusuf, president and director of state-owned PT Danareksa Securities; Simon Subrata, a corporate finance official with the Salim Group and a member of the contact committee; Ossy Tirta, a Salim Group USA official; and Rino Effendi, an economist with Danareksa.

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