BDF debt restructuring plan approved

JAKARTA (JP): Publicly listed PT BBL Dharmala Finance (BDF) announced on Thursday its debt restructuring proposal received initial approval from the negotiation team representing the company's creditors.

"The creditors' debt restructuring steering committee has approved our restructuring proposal," a BDF executive said after the company's annual shareholders meeting.

Company director Sim Idrus Munandar said the next step was to gain final approval from all of its creditors for its proposal to restructure its US$141 million debt.

The steering committee consists of five creditors who represent some 15 local and foreign creditors in the debt settlement negotiations, BDF corporate secretary Indrawati Gunawan said.

The five creditors on the steering committee include the International Finance Corporation, which is the World Bank's private investment institution, the Commonwealth Development Corporation and Dutch financial institution FMO, Indrawati said.

"The approval from the creditors means they still believe in the recovery of our company," Indrawati said.

The financial crisis, which hit Indonesia in August 1997, has affected most of the country's business sectors, particularly after the government raised interest rates to as high as 70 percent to cope with spiraling inflation.

Indrawati said about 65 percent of BDF's leasing facilities were given to small and medium-size companies.

She said a number of these companies could not service their debt, so their financed machinery and equipment, which also served as collateral, had to be repossessed by BDF for resale.

"We need the funds from the resale of this machinery to service our own debt," Indrawati said.

The company provided Rp 4 billion in new financing in 1998 down from Rp 589 billion the previous year, she said.

BDF suffered a Rp 247 billion net loss in 1998, compared to a Rp 145 billion net loss the previous year due to increased foreign exchange losses resulting from the company's U.S. dollar debt exposure.

The company's equity entered the red at minus Rp 245 billion at the end of 1998, from Rp 2.1 billion the previous year.(udi)