Dharmala upset by bankruptcy demand

JAKARTA (JP): Publicly listed PT Dharmala Sakti Sejahtera said on Thursday it was "extremely disappointed" with PT Hanil Bakrie Finance's decision to ask Jakarta Commercial Court to declare it bankrupt.

Dharmala's corporate secretary Migi Byaktika said Hanil should have taken part in the company's financial restructuring program instead of seeking a solution through the court.

"The company management is extremely disappointed that Hanil Bakrie refused to take part in the program and instead chose to seek a solution through the court," Byaktika said in a statement.

Hanil Bakrie Finance, a joint venture between Korea's Hanil Leasing Company Ltd and Bakrie Group, filed a petition against PT Dharmala earlier this week for the latter's failure to repay US$2.2 million in promissory notes which fell due on Jan. 8 last year.

Byaktika said that Dharmala had sought to restructure its debts and drew attention to the fact that Dharmala Group had proposed debt restructuring plans in September and December last year.

She said the company was also preparing for more debt settlement discussions with its foreign creditors in early February.

"The bankruptcy petition filed by Hanil Bakrie highlights the difficulties Dharmala has faced in dealing with some North Asian creditors, which are neither able nor willing to accept a debt to equity conversion," she said.

She noted that creditors from North Asia preferred cash settlements, which was particularly difficult for Dharmala, which is currently facing cash flow difficulties.

Dharmala holds stakes in a number of financial services companies, however dividends from these assets have dried up as a result of the economic crisis.

"Dividends from Dharmala's portfolio, which are its main source of revenue, have declined due to the severe economic crisis," she said.

Dharmala Sakti, established in 1981, is a holding company for the financial services division of Dharmala Group. The company offers a range of services including banking, insurance, and capital market and business consultancy services.

The firm, which is 70 percent owned by PT Dharmala Intiutama and 30 percent owned by the investing public, suffered a net loss of Rp 325.4 billion in 1997 as a result of the economic crisis. (aly)