Creditors balk at debt plan of BII arm

Creditors balk at debt plan of BII arm

JAKARTA (JP): President of Bank Internasional Indonesia (BII)
Indra Widjaja said on Tuesday that three foreign creditors had
rejected suggestions to reschedule over US$65 million in
syndicated loans owed by the bank's wholly owned subsidiary, PT
BII Finance Center.

Indra said the creditors, which include Asian Banking
Corporation, Credit Agricole Indosuez and Arab Banking
Corporation, turned down a proposal to reschedule the debts,
which matured this year, for repayment in eight years.

"(BII Finance Center) actually asked for a rescheduling since
because of the current condition it would be unable to repay the
principle... but they (the creditors) turned it down," he said
during a hearing with the House of Representatives Commission
VIII for the state budget, finance and banking.

Indra said that during the rescheduling period, the
multifinance firm would be able to repay the interest on the
debt.

He added that the bank had reported the creditors to the
Jakarta Initiative Task Force and the World Bank for their lack
of cooperation in supporting the government's program.

He said the World Bank responded by saying that the foreign
creditors' actions were ridiculous.

"I think its just their (creditors) tactic because their main
target was BII," he said, without elaborating.

The government-sponsored task force was formed last year with
a mission to play a mediating role in encouraging both creditors
and debtors to reach out-of-court debt settlements.

Indra was responding to a report that the three foreign
creditors had filed a bankruptcy suit against BII Finance Center
with the Jakarta Commercial Court for failing to repay its debts.

The foreign lending institutions are also suing BII for its
inability to make sure BII Finance Center repay its debts.

Indra was summoned by the House to explain the bank's
recapitalization program, which is sponsored by the government.

Indra said the bank would issue other rights in September or
October to reduce the government's stake in the bank.

He said that by the end of this year, the government
investment in the bank would be reduced significantly.

BII is one of the country's major private banks which has been
recapitalized to lift the bank's capital adequacy ratio to the
minimum 4 percent level.

The bank launched its first rights issue in April, raising Rp
11.114 trillion for recapitalization purposes.

The government, which acted as standby purchaser of the rights
issue, ended with more than a 70 percent stake in the bank.

A second rights issue by the bank reduced the government stake
to 59.8 percent. (rei)