IBRA plans to clear over Rp 130t in large bank loans

IBRA plans to clear over Rp 130t in large bank loans

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
plans to resolve and restructure over Rp 130 trillion (US$13.83
billion) in corporate loans in 2001.

Head of IBRA's asset management credit (AMC) division
Riswinandi said on Wednesday that the new government debt
restructuring guideline issued late last year would help the
agency to achieve more restructuring deals.

"We expect to be able to resolve around 90 percent (of the
large loans) in 2001," Riswinandi told a press conference.

He said that once the non-performing loans had been
restructured, IBRA would immediately sell the loans to banks or
investors.

"The new guidelines will expedite the restructuring and the
recovery of the loans," he added.

The Financial Sector Policy Committee (FSPC) issued a new debt
restructuring guideline in which IBRA could provide interest rate
discount.

The guideline also stipulates that restructured debts can be
refinanced by a bank or investors without having to go through a
bidding process as long as the recovery rate of the debt is more
than 70 percent of the initial amount of the debt principal.

The FSPC, which groups several senior economic ministers,
oversees the country's major debt and bank restructuring
programs.

IBRA received around Rp 286.28 trillion worth of bad debts
from closed banks, nationalized banks, and recapitalized banks
between 1998 and 1999 during the height of the country's
financial and economic crisis.

Around Rp 245 trillion of the loans are categorized as
corporate large loans, and more than Rp 41 trillion are
considered as retail loans.

The agency is mandated to resolve the loans via a
restructuring process and to collect them to help finance the
state budget heavily burdened by the huge cost of the government
bank restructuring and recapitalization program.

For the current 2001 budget year, the AMC division must
contribute around Rp 12.2 trillion to the agency's cash target of
Rp 27 trillion.

Another Rp 10 trillion worth of IBRA's restructured loans
would be swapped with government bank recapitalization bonds held
by the banking sector.

Last year, the agency managed to resolve around 89 percent of
the Rp 88.7 trillion loans owed by its 21 largest debtors (owing
loans of an individual amount of more than Rp 50 billion) mostly
consisted of powerful conglomerates that thrived during the era
of former authoritarian president Soeharto.

The resolution includes reaching debt restructuring MOUs with
debtors, final restructuring deals, and initiating legal action
against uncooperative debtors.

Riswinandi said that IBRA was now focussing on its 50 largest
debtors owing more than Rp 130 trillion in bad debt.

This included the "left overs," which had not been able to be
resolved last year.

Among the top 50 largest debtors currently being processed by
Riswinandi's division are the Bimantara Group with total
outstanding loans of Rp 3.07 trillion, Tirtamas Group (Rp 3.90
trillion), Barito Group (Rp 8.41 trillion), Napan Group (Rp 4.14
trillion), and Bob Hasan Group (Rp 5.23 trillion)

According to IBRA's press statement, the debt restructuring
progress of the five conglomerates are as follows: the agency is
in the process of reaching debt restructuring MOUs with 15
indebted companies of the five conglomerates, MOU's signed with
39 debtors, final debt restructuring agreement reached with 12
debtors, and nine debtors have settled their obligation.

The agency also said that the debt of telecommunications firm
PT Satelindo had been restructured and had been sold to investors
last year.

IBRA said that it had initiated legal action against eight
companies including four belonging to Tirtamas, three to Napan,
and one to Bob Hasan.(rei)