House, govt meet quietly over BII

House, govt meet quietly over BII

JAKARTA (JP): The government held a closed-door meeting with
members of the House of Representatives (DPR) late on Wednesday
over their plan to issue bonds to Bank Internasional Indonesia
(BII).

The decision to hold the closed-door meeting was made after
Minister of Finance Boediono and State Minister of State
Enterprises Laksamana Sukardi "failed" to convince legislators of
the move during an open meeting earlier in the day.

"Due to the sensitivity of the issue, we would like to explain
the issue in a closed-door meeting," Laksamana said.

The government is seeking the House's approval over its plan
to issue hedge bonds totaling around Rp 12 trillion to allow the
transfer of BII's bad debts to the Indonesian Bank Restructuring
Agency (IBRA). Debts worth US$1.06 billion are owed by BII's
parent company Sinar Mas Group.

Under the plan, once the House provides approval, IBRA would
inject recycled bonds into BII to facilitate transfer of the bad
debt.

The government would later replace the recycled bonds with
rupiah hedged bonds carrying a lower interest rate.

The arrangement, however, requires the owners of Sinar Mas to
surrender assets worth 145 percent of the total debt.

Legislators are concerned that the assets transferred by the
Sinar Mas Group have also been pledged to overseas creditors,
which may result in the government being unable to sell them when
necessary.

Sinar Mas owes around $12 billion to its bond holders
overseas.(03)