Govt, Marubeni reach deal on Chandra Asri's debt

The Jakarta Post, Jakarta

The government and Japan's Marubeni Corp. have clinched a deal on the restructuring of US$1.2 billion debt owed by petrochemical firm Chandra Asri, according to a senior government official.

"The deal will be signed tomorrow (today)," secretary of the Financial Sector Policy Committee Syafruddin Temenggung said on Tuesday.

He said both parties had cleared the latest hurdles for the deal, after the Japanese firm accepted the government's proposal to incorporate three special points into the debt-restructuring deal.

The government asked that the deal contain a clause stipulating that any change in Chandra Asri's shareholder composition would follow existing regulations, a non-default clause that prohibits any parties from declaring Chandra Asri bankrupt for failing to pay its debt, and a clause saying Chandra Asri's excess cash flow should be distributed among shareholders as dividends.

Chandra Asri owes some $730 million to a consortium of foreign creditors led by Marubeni and another $464 million to the Indonesian Bank Restructuring Agency (IBRA), which took over the loans from ailing domestic banks.

Late last year, after long and tough negotiations, Marubeni agreed to convert $147 million of the debt into a 24 percent stake in Chandra Asri. Previously, the Japanese firm had only agreed to take a 20 percent stake in the company.