Govt fails to reach deal with Prajogo over assets

Govt fails to reach deal with Prajogo over assets

JAKARTA (JP): The government failed on Tuesday to reach a deal
with tycoon Prajogo Pangestu to surrender his personal assets to
repay debt.

The Financial Sector Policy Committee (FSPC) said that the
assets proposed by Prajogo did not meet the criteria set by the
committee.

"The additional assets offered today by the shareholder of
Chandra Asri do not meet the requirements of the FSPC. So,
Chandra Asri has been granted additional time to surrender its
assets," said FSPC in a press statement prepared by Inke Maris, a
private public relations manager.

The statement did not say what assets had been proposed by
Prajogo and when the new deadline would be. The statement was
issued following a late evening meeting of the FSPC with Chandra
Asri's officials.

Reports have earlier said that Prajogo was planning to offer
his stakes in chemical firm PT Try Polyta, and in timber
companies PT Barito Pacific and PT Tanjung Enim Lestari.

Prajogo is the founder of the giant petrochemical firm Chandra
Asri, which owes more than Rp 3 trillion to the Indonesian Bank
Restructuring Agency (IBRA).

The company also owes around US$700 million to a consortium of
foreign creditors led by Japan's Marubeni Corp.

The FSPC recently reached a restructuring deal with Prajogo
over Chandra Asri's debt to IBRA, under which the government via
IBRA would own 31 percent of the company, Prajogo 49 percent, and
Marubeni 20 percent.

Under the deal, Prajogo, through his company PT Inter Petrindo
Inti Citra (IPIC), would take over $638.6 million of Chandra
Asri's foreign debts and Rp 120 billion of its local debts.

Coordinating Minister for the Economy Rizal Ramli had demanded
that Prajogo provide his personal assets to IBRA as part of the
debt restructuring deal.

Rizal also heads the FSPC which groups several senior economic
ministers. The committee has the final say on the country's major
bank and corporate restructuring deals.

The deadline for Prajogo to surrender personal assets was
actually last week, but Rizal then granted a second deadline
(today), which was again extended.

Rizal had earlier said that if Prajogo failed to meet
Tuesday's deadline he could risk severe action from the
government.

IBRA Chairman Edwin Gerungan declined to comment.

Irwan Siregar, deputy chairman of IBRA who handles debt
restructuring at the agency, also would not comment.

"Please ask Inke Maris," he said.

The government has been under fire over its restructuring
deals with top conglomerates who thrived during the era of
authoritarian rule of former president Soeharto.

The government initially agreed to take over 80 percent of
Chandra Asri, but the government later changed its mind following
criticism that the deal was a bailout. The government also feared
that by taking an 80 percent stake, it could become liable to
future debts of Chandra Asri.

The FSPC is also negotiating with Marubeni to reach an
agreement on new terms.

The FSPC had ordered IBRA to continue negotiations with
Marubeni to persuade the Japanese firm to take more risks in
Chandra Asri by converting the latter's debt into a greater
amount of equity, lowering the interest rate, and extending the
maturity of the debt.

The government also wanted the interest rate to be reduced
from the current 2.5 percent over Libor (London Interbank
Offering Rate) to zero percent plus libor, and the repayment
period of Chandra Asri's foreign debt to be extended to 15 years
from 12 years.

IBRA is a unit of the finance ministry. The agency received
around Rp 260 trillion worth of bad debts from the country's
ailing banks and closed down banks. It is mandated to
restructured the debt.

Chandra Asri is one of IBRA's top debtors.

Separately, IBRA said on Tuesday in a press statement that it
had reached a restructuring deal with state owned aircraft
manufacturer PT Industri Pesawat Terbang Nusantara over some Rp
1.87 trillion debt through a combination of cash settlement and
debt to equity swap.

IPTN is an aircraft company founded by the former president
B.J. Habibie who was research and technology minister at the
time. The company had borrowed heavily from state-owned banks.

The agency also said that it had reached a restructuring deal
with Inti Group over a Rp 809.85 billion debt. IBRA did not
mention the group's line of business.

IBRA is targeted to restructure the debts of its 21 top
debtors by the end of this year, including those involving cash
settlements.

The agency must raise around Rp 18.9 trillion in cash in the
current budget year ending Dec. 31, 2000 which will involve
selling various bank assets under its management.

IBRA has so far raised around Rp 16 trillion. The proceeds
will help finance the 2000 budget deficit estimated at 3.2
percent of gross domestic product. (rei)