FSPC sets new guidelines for corporate restructuring
FSPC sets new guidelines for corporate restructuring
JAKARTA (JP): The Financial Sector Policy Committee (FSPC) has
set new guidelines for future corporate restructuring deals under
the Indonesian Bank Restructuring Agency (IBRA) in a bid to
improve transparency and accountability.
FSPC said in a media statement that new debt restructuring
guidelines were made following consultation with the
International Monetary Fund (IMF) and the World Bank.
The committee said that all restructuring plans must be based
on business feasibility by taking into account cash flow
projection.
"The sustainable debt is restructured based on market
conditions, while unsustainable debt is converted into quasi-
equity and equity. For the equity portion, IBRA or IBRA in
addition to other creditors will take a majority position," it
said.
"The original owners (of the indebted companies) must provide
a personal guarantee on the (restructuring of the) unsustainable
debt portion and the quasi-equity owned by IBRA," it added.
FSPC also said that it would explain the rationale behind any
debt restructuring plan, and that an oversight committee would
review restructuring deals worth Rp 250 billion (US$24 million)
or more.
FSPC groups several senior economic ministers led by
Coordinating Minister for the Economy Rizal Ramli. The committee
has the final say on major restructuring deals made by IBRA.
The agency has been criticized by many analysts, including the
IMF and World Bank, over past restructuring deals which seem to
favor indebted debtors and, in particular, large and well-
connected business groups.
Elsewhere, the FSPC also said that it had approved the debt
restructuring of Asia's largest integrated shrimp producer PT
Dipasena Citra Darmaja and timber conglomerate Kalimanis Group.
FSPC said that under the restructuring deal, the owners of
Dipasena would not have to repay its Rp 1.9 trillion debt to IBRA
as previously demanded by the committee.
But in return the Dipasena owners must provide fresh capital
to rehabilitate operations and as working capital for the shrimp
farmers. Dipasena must also write off all the debts that the
shrimp farmers owed the company
Dipasena operates under the so-called "core-plasma" scheme, in
which the company acts as the nucleus to provide credit to shrimp
farmers as the plasma but in return the farmers are required to
sell their output to the company.
The FSPC said that it had also agreed to write off the
interest charge of the farmers' debts worth around Rp 1.1
trillion as well as part of the principal debt.
Dipasena is owned by tycoon Sjamsul Nursalim. The company owes
debt to IBRA, which took over the loan from ailing local banks.
The FSPC added that it had also approved the debt
restructuring of eight companies belonging to the Kalimanis
Group, controlled by timber tycoon Bob Hasan, owing Rp 623
billion plus $119.6 million in debt to IBRA.
The committee said that the repayment of sustainable debts of
PT Jati Dharma, PT Jati Cahaya Cemerlang, and PT Lakosta Indah
were rescheduled to 6-7 years, while that of PT Kalimanis Plywood
Industries was stretched to a 10-year period.
It added that debts of the other four companies worth Rp 1.16
trillion were considered unsustainable and were put into a new
holding company, which would later issue promissory notes backed
up by the personal assets of Bob Hasan.(rei)
JAKARTA (JP): The Financial Sector Policy Committee (FSPC) has
set new guidelines for future corporate restructuring deals under
the Indonesian Bank Restructuring Agency (IBRA) in a bid to
improve transparency and accountability.
FSPC said in a media statement that new debt restructuring
guidelines were made following consultation with the
International Monetary Fund (IMF) and the World Bank.
The committee said that all restructuring plans must be based
on business feasibility by taking into account cash flow
projection.
"The sustainable debt is restructured based on market
conditions, while unsustainable debt is converted into quasi-
equity and equity. For the equity portion, IBRA or IBRA in
addition to other creditors will take a majority position," it
said.
"The original owners (of the indebted companies) must provide
a personal guarantee on the (restructuring of the) unsustainable
debt portion and the quasi-equity owned by IBRA," it added.
FSPC also said that it would explain the rationale behind any
debt restructuring plan, and that an oversight committee would
review restructuring deals worth Rp 250 billion (US$24 million)
or more.
FSPC groups several senior economic ministers led by
Coordinating Minister for the Economy Rizal Ramli. The committee
has the final say on major restructuring deals made by IBRA.
The agency has been criticized by many analysts, including the
IMF and World Bank, over past restructuring deals which seem to
favor indebted debtors and, in particular, large and well-
connected business groups.
Elsewhere, the FSPC also said that it had approved the debt
restructuring of Asia's largest integrated shrimp producer PT
Dipasena Citra Darmaja and timber conglomerate Kalimanis Group.
FSPC said that under the restructuring deal, the owners of
Dipasena would not have to repay its Rp 1.9 trillion debt to IBRA
as previously demanded by the committee.
But in return the Dipasena owners must provide fresh capital
to rehabilitate operations and as working capital for the shrimp
farmers. Dipasena must also write off all the debts that the
shrimp farmers owed the company
Dipasena operates under the so-called "core-plasma" scheme, in
which the company acts as the nucleus to provide credit to shrimp
farmers as the plasma but in return the farmers are required to
sell their output to the company.
The FSPC said that it had also agreed to write off the
interest charge of the farmers' debts worth around Rp 1.1
trillion as well as part of the principal debt.
Dipasena is owned by tycoon Sjamsul Nursalim. The company owes
debt to IBRA, which took over the loan from ailing local banks.
The FSPC added that it had also approved the debt
restructuring of eight companies belonging to the Kalimanis
Group, controlled by timber tycoon Bob Hasan, owing Rp 623
billion plus $119.6 million in debt to IBRA.
The committee said that the repayment of sustainable debts of
PT Jati Dharma, PT Jati Cahaya Cemerlang, and PT Lakosta Indah
were rescheduled to 6-7 years, while that of PT Kalimanis Plywood
Industries was stretched to a 10-year period.
It added that debts of the other four companies worth Rp 1.16
trillion were considered unsustainable and were put into a new
holding company, which would later issue promissory notes backed
up by the personal assets of Bob Hasan.(rei)