Debt restructuring of Texmaco, Tirtamas OK'd

Debt restructuring of Texmaco, Tirtamas OK'd

JAKARTA (JP): The Financial Sector Policy Committee (FSPC)
said on Tuesday that it had approved a proposal to restructure
the debt of the giant Texmaco and Tirtamas groups.

The FSPC said in a press statement that under the two-stage
restructuring plan proposed by the Indonesian Bank Restructuring
Agency (IBRA), Texmaco's debt to IBRA would be transferred into a
new holding company which later on would issue exchangeable bonds
to the agency.

IBRA can then sell the exchangeable bonds in the secondary
market or exchange it with the assets under the holding company
when the bonds mature.

There were no details about the bond structure.

"The second stage is to restructure the debt of each (Texmaco)
subsidiary," FSPC said.

The committee also said that under the plan, Texmaco would
surrender collaterals such as land and building, machinery,
receivables and inventories and stocks, including a personal
guarantee.

IBRA chairman Cacuk Sudarijanto said late on Monday the
restructuring plan would result in the government owning 70
percent of the holding company while the remaining 30 percent
would be in the hands of Texmaco founder Marimutu Sinivasan.

A similar restructuring plan would also be applied to the
Tirtamas group, although the ownership of IBRA in this holding
company has yet to be decided, FSPC said.

The FSPC groups several senior economics ministers led by
Coordinating Minister for the Economy Rizal Ramli. The committee
has the final say on IBRA's major restructuring or asset disposal
programs.

Texmaco is an integrated textile company. The group is the
largest debtor of IBRA as 16 of its subsidiaries owe a combined
Rp 16.5 trillion to the agency.

IBRA took over Texmaco's debt to domestic banks.

Rizal said on Tuesday that the restructuring plan for Texmaco
was not a government bailout for the private sector.

"It is not a bailout. It's a restructuring plan in which the
Texmaco founder has finally agreed to allow the government to
have a 70 percent stake compared to around 50 percent
previously," Rizal told reporters after a meeting with the House
of Representatives Speaker Akbar Tandjung.

Tirtamas, a diversified conglomerate with interests in cement,
petrochemicals and finance, is also another of IBRA's major
debtor with total debt of more than Rp 2.2 trillion. The group is
controlled by Hashim Djojohadikusumo.

Restructuring the debt of IBRA's huge debtors is key to
helping the country recover from its current economic troubles.

The FSPC also said that it had approved the plan to
restructure some US$628.4 million debt of paper concern PT Kiani
Kertas which is owed by tycoon Mohamad "Bob" Hasan, the long-time
golfing partner of former president Soeharto.

The committee said that under the plan, the sustainable
portion of the debt amounting to $226.5 million would be
stretched into a 10-year term loan with a grace period of two
years and at an interest rate of 12 percent.

It said that $246.6 million of the unsustainable portion would
be converted into mandatory convertible bonds while the remaining
$5.6 million would be restructured through a debt to equity swap.

Elsewhere, the FSPC approved IBRA's plan to extend the
repayment period of Sinar Mas group's debt to its financial unit
Bank Internasional Indonesia (BII) until September 2003.

The committee has also agreed for IBRA to pay Rp 591 billion
in eligible inter-bank claims to BII and swap the ineligible
inter-bank claims with the restructured loans under IBRA.

But the FSPC said that the Sinar Mas group was required to
repay 20 percent of the ineligible claims in cash. (rei)