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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