Fri, 30 Nov 2001

IBRA plans holding firms for equity and property assets

Berni K. Moestafa, The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) said it planned on creating two holding companies to accommodate the properties and equity it took over from bank debtors, allowing the agency to manage the assets beyond IBRA's term of operation in 2004.

One holding company would manage IBRA's properties, while the other would manage those firms in which it owns equity, IBRA chairman I Putu Gede Ary Suta said on Thursday.

According to him, consolidating the assets will enable IBRA to divest them faster and at a better price.

The plan has yet to receive the approval of the Fiscal Sector Policy Committee, for which IBRA was working on a proposal, he said.

He said the numerous properties that were piling up at IBRA needed special attention lest their sales become ineffective.

"Otherwise, in the time limit we have we would not be able to wrap up our work here," he explained.

But he also agreed to a delay in the sales of properties if current market prices were deemed to low.

Ary Suta referred to a 16,000 hectare property owned by IBRA in Pulau Bintan, which, if sold now, would generate very little profit.

On equity, Ary Suta said the holding company would hold stakes it acquired from debtors reaching a settlement through a debt to equity swap scheme.

For instance, he said, IBRA owned a 10 percent stake in the Bakrie Brothers Group after agreeing to convert the group's debt of Rp 673.5 billion (about US$64 million) into equity.

"Now we have a 10 percent stake, but who's going to follow up on this (debt restructuring), and who will attend the shareholder meetings?" Ary Suta asked, after a press briefing on Bakrie's debt restructuring.

Ary Suta refused to reveal how much IBRA owns in property or equity.

The agency has amassed some Rp 600 trillion in assets taken over from bank owners and their debtors. About one third of this is in the form of bank loans.

IBRA is in charge of selling the assets to help recover public funds used for bailing out the banking sector hit by the financial crisis which began in 1997.

Founded in 1998, the agency is slated to finalize its work by 2004. But with a recovery rate of only eight percent as of Dec. last year, there are worries it may not meet its targets on time.

At present, IBRA oversees several holding companies that groups together assets or companies belonging to one debtor.

One is PT Holdiko Perkasa, to which were transferred from companies formerly owned by the Salim Group.