Debt restructure of toll road may cause bank losses

Debt restructure of toll road may cause bank losses

JAKARTA (JP): The restructuring of the Jakarta Outer Ring Road
(JORR) toll road project by the Indonesian Bank Restructuring
Agency could cause local banks losses of approximately Rp 1.5
trillion (about US$143 million).

The president director of Bank IFI, Harry Rachmadi, said on
Thursday IBRA had only acknowledged about Rp 1 trillion of the
more than Rp 2.5 trillion in total debt owed by the toll road's
developers to local banks.

"IBRA said the remaining Rp 1.5 trillion was unaccounted for,"
he said on the sidelines of a seminar on the impact of the
restructuring of the JORR project on creditors and foreign
investors.

The JORR project was initially developed by PT Citra Bhakti
Margatama Persada (CBMP), PT Citra Mataram Satriamarga Persada
(CMSP) and PT Marga Nurindo Bhakti (MNB) under a build-operate-
transfer scheme with state-owned toll operator PT Jasa Marga.

The three companies, which were partly owned by former
president Soeharto's daughter Siti Hardijanti Rukmana, also known
as Tutut, obtained Rp 1.15 trillion in loans from a syndicate of
local banks, including Bank IFI.

The loans turned sour after the economic crisis hit the
country in 1998. The project was then suspended as part of the
government's retrenchment program to cope with the crisis. IBRA
later took over 87 percent of the three companies' principal
debt, or about Rp 1.07 trillion, as part of the consolidation of
the country's banking industry.

IBRA and Jasa Marga established a new company -- PT Jalantol
Lingkar Luar Jakarta (JLJ), in December last year to take over
the toll road project. The new company is also responsible for
settling the debts owed to IBRA by the three companies previously
involved in the project.

Mohammad Syahrial, the head of IBRA's asset management credit
division, said earlier IBRA only took over Rp 1.07 trillion of
the debt because the remaining 13 percent of the money had not
been used to finance the toll road project.

However, Harry Rachmadi said the total debt, including
interest payments and penalties, had swelled to Rp 2.59 trillion
as of December last year, because the toll road developer had
failed to make any installment payments.

Furthermore, he said, IBRA's plan to convert the debt to
equity in JLJ would put foreign investors, in this case the
Malaysian consortium BRD-HiCom, in control of the toll road
project with a 65 percent majority stake in the new company.

"If the total debt (including interest and penalties) was
accounted for, IBRA and Jasa Marga would own a 56 percent
majority in the new company," he said.

The bank syndicate which provided the loans originally
comprised 20 local banks, though only seven of these banks
survived the economic crisis.

Five of these seven banks are in IBRA's restructuring program,
including the project's major creditor, Bank International
Indonesia. The other two banks are Bank IFI and Bank Panin.

The Malaysian consortium, which comprises two subsidiaries of
BRD-HiCom BHD -- Perspec BHD and Comtrac BHD, as well as
road builder SDB BHD and Ranhill Corporation SDN BHD, has been
named the preferred bidder for the toll road project.

The Malaysian consortium was named the preferred bidder after
it agreed to provide Rp 800 billion to finance land acquisitions
for the project. (tnt)