Dharmala upset by bankruptcy demand

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)