BPUI repays Timah with a plot of land
Rendi A. Witular, The Jakarta Post, Jakarta
After a five-year dispute, state-owned mining company PT Timah was able to retrieve its investment from PT Bahana Pembinaan Usaha Indonesia (BPUI), the troubled state-owned investment company.
In a report to the Jakarta Stock Exchange on Thursday, Timah, the world's largest integrated tin producer, said BPUI agreed to settle its US$17 million and Rp 61 billion (about $7 million) debt through a debt-to-asset swap arrangement.
Under the agreement, BPUI will surrender a 1.76 million square-meter plot of land Bantar Gebang, Bekasi, West Java.
Timah public relations official Pudji Samekto told The Jakarta Post a debt-to-asset swap settlement was the only way the company was able to recoup its investment from the cash-strapped BPUI.
"Well, there was no other option. We are lucky just to get the principal back because we almost got nothing, as BPUI is also obliged to repay huge debts to other creditors," said Pudji.
Timah said it had not decided what to do with the land as the company was currently in need of cash to finance its $20-million exploration plans.
After news of the deal, Timah shares decline Rp 25 to Rp 725 amid an overall weak market sentiment.
The dispute between Timah and BPUI began in 1998 when Timah made a short-term investment of $22 million and Rp 61 billion through the purchase of BPUI promissory notes.
After three months, BPUI was only able to pay back $5 million, defaulting on the remainder.
Timah attempted to recoup its money several times, filing a number of bankruptcy suits against BPUI between 1998 and 2001.
The company was also competing with other BPUI creditors attempting to recoup their investments.
The company suffered serious money woes during the tenure of Sudjiono Timan, BPUI's president between 1994 and 2001.
According to state prosecutors, BPUI suffered losses of at least $240 million during these years.
Sudjiono was accused of channeling the company's money to a number of influential businessmen. Sudjiono was brought to trial in September 2002 for corruption, but was eventually acquitted on all charges.