Chandra Asri urges govt to complete restructuring

CILEGON, Banten (JP): The management of petrochemical giant PT Chandra Asri Petrochemical Center called on the government to quickly complete the company's debt restructuring program to avoid further financial losses.

"We hope the government will immediately finalize Chandra Asri's debt restructuring which has been stalled for more than two years," Chandra Asri's vice president Leo Mulyadi told reporters on Saturday on the sidelines of a company gathering to celebrate its sixth anniversary.

Meanwhile, company finance manager Salikim said that further postponement would only cause ballooning interest payments.

"The government must keep in mind that what we're doing is trying to prevent greater losses," he said.

Chandra Asri owes some US$730 million to a consortium of foreign creditors led by Japan's Marubeni Corp., and another $464 million to the Indonesian Bank Restructuring Agency (IBRA), which took over the loans from ailing domestic banks.

The restructuring of Chandra Asri debts has been dragging on due primarily to disagreements between the Japanese creditor and IBRA.

The last restructuring deal approved by the previous economics team led by then coordinating minister for the economy Rizal Ramli was rejected by IBRA, and was alleged by the agency's independent oversight committee to favor the Japanese creditors and be disadvantageous to IBRA.

Minister of Trade and Industry Rini MS Soewandi is currently trying to sort out the mess. Earlier this month, Rini said that the government was expected to reach a restructuring agreement soon.

Sources said that the government had been under pressure from the Japanese government to complete the restructuring deal.

Japan is the country's largest creditor and foreign investor.

Under the earlier deal signed by Rizal, the Japanese creditors were to convert $100 million of their loans into 20 percent equity in Chandra Asri. The rest of the loans were then to have been repayable over a 15-year period with an interest rate of 1.5 percentage points above the London Interbank Offered Rate (Libor).

But IBRA has insisted on Marubeni taking a greater share of the risk in Chandra Asri by converting more loans into equity.

Under the initial scheme, IBRA was to have converted a much greater portion of its loans into a 31 percent equity stake in Chandra Asri, while the remaining 49 percent equity was to have been held by company founder Prajogo Pangestu.

Chandra Asri manufactures various monomer and polymer products which are used in a wide range of industries like textiles, plastics, chemicals.

It produces around 510,000 metric tons per annum (MTA) of ethylene, 240,000 MTA of propylene, 210,000 MTA of pyrolysis gasoline, 200,000 MTA of linear low-density polyethylene and 160,000 MTA of high-density polyethylene. (dmr)