Banks may buy into Kanindotex

Banks may buy into Kanindotex

JAKARTA (JP): Bank Indonesia Governor J. Soedradjad Djiwandono
said on Saturday that the plan of Bank Bumi Daya (BBD) and Bank
Pembangunan Indonesia (Bapindo) to acquire stakes in the heavily
indebted Kanindotex Group faces no legal constraints.

He said that the two banks could acquire stakes in the
Kanindotex Group, provided that their equity participation was
only temporary.

Soedradjad said that, while the Banking Act prohibits banks
from owning shares in companies, "it is not against the law if
the equity participation occurs within the framework of (the
banks') rescuing their loans," he said.

The Kanindotex Group, which operates three textile companies
in Central Java, has bad debts of about Rp 932.94 billion
(US$432.55 million) with BBD and Bapindo, making the two banks
the de facto owners of the group.

The question whether banks are allowed to own a stake in the
group became a subject of debate after a delay in the signing of
an agreement on the takeover of the textile group by a consortium
led by businessman Bambang Trihatmodjo.

The signing of the takeover agreement, which was scheduled to
take place on March 31, was delayed at the last minute,
reportedly because of Minister of Finance Mar'ie Muhammad's
dissatisfaction over the contents of the contract.

The minister is said to have demanded that the consortium
reserve about 20 percent of the Kanindotex Group's shares for the
two banks and a further 20 percent for GKBI, the group's present
caretaker.

Benefit

Sources said that the minister considered the planned takeover
deal, which would allow the consortium to settle the Kanindotex
Group's problem loans within nine years at interest rates of
between four and eight percent per annum, to be unfair, giving
too much benefit to the consortium. The consortium includes
Bambang Yoga Soegama, son of a former chief of the national
intelligence agency, and Johannes Kotjo, a former executive of
the Salim Group.

The consortium's controversial takeover plan was also opposed
by the Indonesian Chamber of Commerce and Industry (Kadin) and
the economic affairs board of the ruling political group,
Golongan Karya (Golkar).

Kadin and Golkar's economic affairs board recently asked the
government to give priority, in seeking a solution to the textile
group's debt problems, to GKBI, which is formally still owned by
the former convict Robby Tjahyadi.

Late last year, Bambang Trihatmodjo, who chairs the widely
diversified Bimantara Group, and Johannes Kotjo jointly acquired
a majority stake in Mayatexdian, a listed affiliate of the
Kanindotex Group.

Business analysts described the move by Bambang's consortium
to take over the Kanindotex Group as a mere trick by which Robby
Tjahyadi was seeking to regain control of the group.

Rizal Ramli, the managing director of the Econit business
consulting firm, predicted that the Kanindotex Group would be
incorporated into Mayatexdian if the consortium was allowed to
take over the company.

"Merging the Kanindotex Group into the publicly-listed
Mayatexdian is another form of back door listing," Ramli said.
(hen)