FSPC OKs restructuring of $93.07m in corporate debt

FSPC OKs restructuring of $93.07m in corporate debt

JAKARTA (JP): The Financial Sector Policy Committee (FSPC) has
approved the restructuring of some US$93.07 million in debt owed
by two companies to foreign creditors and the Indonesian Bank
Restructuring Agency (IBRA), according to a media statement
issued by the committee on Monday.

The FSPC said that the debts were owed by plywood exporter PT
Sumatra Timber Utama Damai (STUD) and by granite mining company
PT Pacific Granitama.

The committee, which comprises several senior economic
ministers and has the final say on the major corporate debt
restructuring program, said that the Jakarta Initiative Task
Force (JITF) had facilitated the debt restructuring process.

JITF is a government sponsored agency with a mandate to help
expedite the corporate debt restructuring process in the country.
So far the agency has facilitated the restructuring of around $10
billion in corporate debt, with an end of April target of $12
billion.

STUD owes around $75.5 million in debt to foreign creditors
and IBRA, of which around $27.8 million is owed to the latter, a
unit of the finance ministry which took over the debt from
troubled and closed down domestic banks.

Under the approved debt restructuring plan, the debt would be
repaid in 5-7 years with an annual interest rate of 3.5 percent
above the Singapore interbank offering rate (Sibor), the FSPC
said.

The committee added that the shareholders of STUD were
required to provide a personal guarantee for its debt to IBRA.

Meanwhile, FSPC said that Pacific Granitama, which has a
mining site on Riau's Karimun Island, owed around $17.37 million
in debt, including $5.98 million to IBRA.

The committee said that under the restructuring scheme, the
principal of the debt would be repaid every four months until the
end of December 2008, with an interest rate of 3 percent above
Sibor for onshore lenders.

It said that the interest rate would be recalculated with an
annual interest rate of 10 percent, of which around $750,000
would be repaid up front upon the signing of the debt
restructuring agreement, while the remainder would be repaid
within one year, starting from December 31, 2007.

The committee added that the shareholders of the company were
also required submit personal guarantees.

The FSPC said that with regard to irregularities revealed as a
result of a recent financial and legal due diligence audit, the
government would take the necessary legal action against existing
and former shareholders, and company top management. The
committee did not provide details.

The restructuring of the country's massive corporate debt is a
crucial factor to help revive investor confidence in the ailing
economy. But many have criticized that the progress of the debt
restructuring has been slow.

Elsewhere, FSPC said that between the period September 2000 to
April 2001, the committee had processed and approved the
restructuring of some Rp 49.71 trillion in debt owed by IBRA's
top 51 debtors, of which 38 debtors had signed MoU agreements
concerning a total debt of around Rp 23.4 trillion, and 11
debtors had signed final restructuring agreements covering a
total debt of around Rp 12.77 trillion.

The committee also said that the corporate debt restructuring
total was "twice" what was hammered out by the previous economic
team between January and August 2000. (rei)