Govt to restructure bad corporate debts

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)