Govt to restructure bad corporate debts

JAKARTA (JP): The government has agreed to restructure the nonperforming loans of the 20 largest corporate debtors at the country's seven state banks, according to chairman of the Indonesian Bank Restructuring Agency (IBRA) Glenn S. Yusuf.

Glenn said on Wednesday that the 20 debtors had more than Rp 60 trillion (over US$7 billion) in nonperforming loans at the state banks.

"The government will announce the (debt) restructuring details on April 23," Glenn told reporters on the sidelines of a legislative session.

IBRA announced recently that it had taken over Rp 100 trillion in nonperforming loans at the country's state banks: Bank Rakyat Indonesia, Bank Dagang Negara, Bank Pembangunan Indonesia, Bank Ekspor Impor Indonesia, Bank Tabungan Negara and Bank Negara Indonesia. The loans were taken out by 1,200 companies.

Glenn said the 20 large corporate debtors would be bailed out through a government-backed debt restructuring program considering their important role to the economy.

He explained that the criteria for eligibility to join the debt restructuring program included the ability to generate foreign exchange revenue and provide employment.

Other government officials have said that the debt restructuring options would include debt to equity swap and interest rate reduction.

But Bank Rakyat Indonesia president Djoko Santoso Mulyono said on Tuesday that state banks would not provide the debtors with debt reduction facilities unless they settled the loans in one payment.

Restructuring the large debtors would provide momentum for the restructuring of the real sector, which together with the bank restructuring program is key to achieving economic recovery.

Corporations failing to reach a debt restructuring agreement with their creditors may be liquidated through the country's commercial court.

Many of the large debtors at state banks are companies controlled by well-connected businesspeople, including the children of former president Soeharto and his cronies.

Rumors emerged this week that Glenn had been threatened by influential businesspeople. Glenn had to move house three times because of the terror campaign, a source said.

Glenn declined to comment on the rumors.

Glenn also said that Bank Indonesia Governor Sjahril Sabirin and finance minister Bambang Subianto were set to sign a recapitalization agreement with owners of the nine private banks eligible to join the government-sponsored recapitalization program. (rei)