Dipasena to receive $240m

Dipasena to receive $240m

The Jakarta Post, Jakarta

Southeast Asia's largest, yet long-troubled shrimp farming firm,
PT Dipasena Citra Darmaja, has been given a much-needed boost as
the Asset Management Company (PPA) managed to seal a US$240
million commitment to help finance the firm's revitalization.

The commitment was secured from PT Renaissance Capital Asia
and PT Recapital Advisors, PPA chairman Mohammad Syahrial said on
Thursday. PPA is the state agency tasked with managing and
supervising assets formerly belonging to deeply indebted
businesses that were taken over by the state.

Syahrial said that the agency had on Sept. 23 named the two
financing firms as Dipasena's preferred creditor, over Transagro
Investment, PT Laranda Powerindo and Fortune Alliance
Investments.

In the deal, Renaissance and Recapital will provide a total of
$150 million for Dipasena's working capital, and some Rp 900
billion ($90 million) in loans for the company's shrimp farmers.

Dipasena operates under what is known as a "core-plasma"
scheme, in which the company acts as a nucleus providing loans to
shrimp farmers, but in return the farmers are required to sell
their produce to the company.

"We chose Renaissance and Recapital's proposal over the others
as they were the only ones willing to provide credit for the
farmers, and had better value-added prospects at the end of their
debt-to-equity option within two years," Syahrial explained.

"They also agreed that the government may retain control of
Dipasena's management board, and committed that they will not
sell Dipasena back to its previous owner."

The government took over Dipasena from Gajah Tunggal Group
tycoon Sjamsul Nursalim to partly settle his Rp 28 trillion debt
to the state following the 1997 Asian financial crisis.

Controversy surfaced as Dipasena's assets turned out to be
very low, resulting in the government failing to sell the company
to investors at a premium price, while Sjamsul allegedly tried to
buy it back at a fire-sale price.

At its peak in 1996, Dipasena could produce an annual $167
million worth of shrimp, which was mostly exported to Japan, the
U.S. and Europe, from its 186,000 hectares of shrimp ponds. Its
production now amounts to only $40 million a year; approximately
30 percent of its maximum capacity.