FSPC approves IBRA deal with Tirtamas

FSPC approves IBRA deal with Tirtamas

JAKARTA (JP): The Financial Sector Policy Committee (FSPC)
announced that it had approved the debt restructuring plan of PT
Tirtamas Majutama and its subsidiaries.

FSPC said here on Wednesday that under the plan, the
Indonesian Bank Restructuring Agency (IBRA) would control a 70
percent stake in Newco, a company established to settle debts
owed by Tirtamas and its subsidiaries to the agency.

The remaining 30 percent will be held by Honggo Wendratno and
his company PT Silakencana Tiralestari.

Tirtamas, a diversified conglomerate with interests in cement,
petrochemicals and finance, is one of IBRA's major debtors with
over Rp 2.2 trillion (about US$200 million) in debts. The group
is controlled by Hashim Djojohadikusumo.

Under Tirtamas' debt restructuring plan, Newco will hold a 70
percent stake in PT Trans Pacific Petrochemicals Indotama, an 80
percent stake in PT Polytama Propindo and 50 percent stakes in
both PT Petro Oxo Nusantara and PT Pacific Fibertama.

The plan allows Newco to ask Tirtamas for additional assets
should IBRA deem the already promised assets insufficient to meet
Tirtamas's obligations.

Tirtamas itself will remain a holding company controlling all
units other than its petrochemical subsidiaries.

IBRA will maintain its control over Tirtamas' performance by
placing representatives in the holding company.

The debt restructuring plan also requires IBRA to hand over
Tirtamas' accounts receivable, claims and asset guarantees to
Newco.

Newco in turn will issue bonds to IBRA in the value of the
Tirtamas assets it receives from the agency.

Tirtamas' founding shareholders will remain responsible for
the repayment of the group's debt to Newco. This requires the
shareholders not only to pledge their shares in Tirtamas to
Newco, but also to control the group's cash flow to ensure it is
capable of repaying the debt.

This will allow Newco to receive debt payments from Tirtamas'
cash flow, dividends and from the proceeds of its asset sales.

Under the debt deal, IBRA has the right to seize the personal
assets of Tirtamas' founding shareholders until they have
completed paying all of its debts to IBRA and Newco.

IBRA's stake in Tirtamas through Newco requires a "clear-and-
free" asset transfer from the group to Newco, and an early debt
restructuring deal with creditors of these units to be
transferred to Newco.

FSPC also requires IBRA to settle Tirtamas' obligations to its
contractors on several of the group's unfinished projects.

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

The committee approved a debt restructuring deal for the
Tirtamas group last year, but IBRA's ownership in the holding
company had not been decided at that time.(bkm)