BPIS wants to keep IPTN, Inti and Barata

JAKARTA (JP): PT Bahana Pakarya Industri Strategis (BPIS) urged the government on Monday to convert nearly Rp 2.5 trillion ($294 million) of debts jointly owed by three of its subsidiaries into equity participation to keep them in Indonesian hands.

BPIS, a holding company overseeing 10 state-owned companies in strategic industries, said the Indonesian Bank Restructuring Agency (IBRA) last month took over its three subsidiaries because of their mountains of unpaid debts.

The three are aircraft manufacturer PT Industri Pesawat Terbang Nusantara (IPTN), foundry and heavy industry PT Barata Indonesia and telecommunications manufacturer PT Industri Telekomunikasi (Inti). Together they owe Rp 1.26 trillion in principal debts and another Rp 1.24 trillion in interest payment arrears.

"We are asking IBRA to consider debt-equity swap arrangements for these three companies in the same way that the agency has offered some private companies," BPIS finance director Juniar Chaidir told reporters.

BPIS President S. Paramajuda said the worst thing that could happen to these three companies would be if the government sold them to foreign "vultures" at rock bottom prices.

In spite of their financial conditions, these companies have good assets and manpower resources, Paramajuda said.

The amount BPIS sought for debt-equity swap arrangements was relatively small compared to the money being injected by IBRA to bail out many private companies, he said.

The best option for the three companies, he added, would be for them to go public, but this could only take place once the companies' capital has been restructured.

Juniar said BPIS and the government were near an agreement in resolving the debts of the three companies towards the end of last year. Negotiations were restarted however after the election of the new government of President Abdurrahman Wahid in October. Then, in May, it was decided that IBRA should take over the three companies.

She cautioned IBRA against choosing the wrong partners for the three companies. "The basis of their selection should not be determined solely on funding. They should be strategic partners."

BPIS, incorporated in 1998, is currently overhauling the capital structures of all 10 companies under its charge. IPTN, Barata and Inti are aspects of the holding company's long term plan to create competitive companies of a global standard.

BPIS's other seven subsidiaries are PT Boma Bisma Indra (industrial equipment), PT Dahana (explosives), PT Industri Kereta Api (rolling stock), PT Krakatau Steel (steel and iron), PT LEN Industri (professional electronics), PT PINDAD (weapons and ammunition) and PT PAL Indonesia (shipbuilding).

Together, these 10 companies control Rp 15.5 trillion ($1.8 billion) in assets and employ 31,800 employees.

All 10 companies export some of their products and all but IPTN ran profitable operations last year. Although their shares are wholly owned by the government, none received further government subsidies. (emb)