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)