IBRA secures deal with top debtors

IBRA secures deal with top debtors

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
has reached a crucial restructuring agreement with some of its
largest debtors, according to agency chairman Cacuk Sudarijanto.

Cacuk said on Tuesday that an agreement has been reached to
restructure 28.45 percent of the Rp 87.35 trillion (about
US$10.27 billion) debt owed by the agency's 21 largest debtors
representing some 340 companies.

Speaking at a hearing with the House of Representatives
Commission IX on state budget and finance, he also said the
agency's legal division would continue with litigation procedures
against several uncooperative indebted companies owing a combined
debt of Rp 6.13 trillion or 7.02 percent of the total Rp 87.35
trillion debt.

He said that the two achievements were in line with the
government target contained in a letter of intent to the
International Monetary Fund that IBRA must reach the stage of
finalizing restructuring term sheets or initiating legal action
against uncooperative debtors for at least 35 percent of the
nominal loan value of the top 21 debtors by end-June.

Cacuk said that the target for the next quarter was to reach
restructuring agreements for at least 70 percent of the total
debts of the largest debtors.

"We expect to be able to finalize the top 21 debtors by the
end of this year," he said.

Some analysts, however, argue that IBRA needs to improve the
business-analysis skills of its negotiators to reach loan workout
agreement with debtors.

"Assigning its legal division to negotiate with debtors is not
helpful in speeding up the process of debt restructuring. IBRA
should instead put the responsibility mainly on its loan workout
division to deal with debtors," Zulvan Lindan, a House member of
the Indonesian Democratic Party of Struggle (PDIP) faction, said
on Tuesday.

IBRA has received some Rp 220 trillion worth of bad loans
transferred from the country's banking sector. The agency is
mandated to restructure and recover the loans to help raise cash
in support of the government's efforts to strengthen the ailing
economy.

IBRA's strategy has been focused on its 21 largest debtors,
mostly companies owned by influential businessmen.

The agency, established in early 1998, has been strongly
criticized for its slow progress in reaching a restructuring deal
with its large debtors.

The restructuring of the agency's largest debtors is seen as a
crucial factor toward encouraging banks to resume lending to the
business sector.

The country's recapitalized banks have declined to resume
lending to the business sector partly due to the huge debt
burden.

IBRA is expected to raise Rp 18.9 trillion this year to help
finance the state budget, with some Rp 10.25 trillion slated to
come from its Asset Management Credit (AMC), which is responsible
for debt restructuring.

AMC official Agustus Sani Nugroho said that the unit had
already raised more than Rp 3 trillion out of the Rp 4 trillion
which has been raised by the agency so far.

Agustus also said that the restructuring agreement signed by
the agency and the large debtors covered all crucial aspects
including the method of restructuring and the time frame of
implementation.

Cacuk said that several of the 21 largest debtors had yet to
sign a restructuring agreement with the agency.

"There are three corporate debtors who are going to sign an
MoU in July with a total amount of more than Rp 3 trillion," he
said.

He didn't name the debtors, but he said Texmaco Group is among
the group that has not reached a restructuring agreement. Texmaco
is the largest debtor with its 20 companies owing a total of Rp
16.97 trillion.

He said that the other debtors in the group are Bob Hasan, a
timber tycoon, who owes the agency some Rp 6.34 trillion, PSP
Group owing 4.15 trillion, Djajanti Group (Rp 3.8 trillion),
Tirtobumi Group (Rp 2.9 trillion), Dharmala Group (Rp 2.73
trillion), and Kodel Group (Rp 1.85 trillion).

The debt restructuring deal struck by the agency with its
largest debtors as of end June is as follows:

* The Barito Pacific Group with 17 companies owing a combined
Rp 7.28 trillion, of which 46.8 percent has been restructured.

* The Humpuss Group with 15 companies owing Rp 5.69 trillion,
of which 41.3 percent has been restructured

* The Bakrie Group, with 24 companies, owes Rp 5.91 trillion
in debt, and 57.8 percent has been restructured.

* The Tirtamas Group, with 14 companies, owes Rp 2.29
trillion, and 52.5 percent has been restructured.

* The Napan Group, with 16 firms, owes Rp 3.68 trillion and
has restructured 77.1 percent.

The other restructuring deals include some debts owed by the
Bimantara Group, Raja Garuda Mas Group, Bahana Group, Ongko,
Gunung Sewu Group, Danamon Group, and Nugra Santana Group.

The agency also has reached restructuring deals for 100
percent of debts owed by Rajawali Group (Rp 2.68 trillion), and
98.1 percent of the debts owed by the Argo Pantes Group (Rp 1.9
trillion). (rei)