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)