IBRA seeking additional assets from Sinar Mas

IBRA seeking additional assets from Sinar Mas

Dadan Wijaksana, The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) is seeking
additional assets from the Sinar Mas Group because the value of
assets pledged last year is still less than the required amount.

IBRA chairman I Putu Gede Ary Suta said on Wednesday that the
agency had recently completed the appraisal of the assets.

"There is a difference (in terms of value) between the
disclosure of assets and the auditor's report appraisal.

"According to the regulations they have to surrender
additional assets," Ary Suta told reporters on the sidelines of a
hearing session with legislators.

However, he fell short of explaining how many additional
assets Sinar Mas must surrender.

The government decided in January last year to guarantee Rp
13.7 trillion (US$1.3 billion) of Sinar Mas debts in Bank
Internasional Indonesia (BII) in a bid to spare the ailing bank
from deeper trouble due to a possible default by the ailing
group, which also owes billions of dollars to international
creditors and bondholders.

In return, Sinar Mas agreed to surrender assets equal to 145
percent of its debts to BII as collateral until the group repay
the debts.

Sinar Mas is expected to repay its debts in installments with
the last payment, amounting to 65 percent of the total debt, to
be made in September next year.

BII, the former financial arm of Sinar Mas, is now majority
owned by the government via IBRA following a government-sponsored
recapitalization program.

Around 90 percent of Sinar Mas' debts to BII belong to the
group's Singapore-based Asia Pulp & Paper Co., which has
defaulted on more than $12 billion of foreign debt.

Sinar Mas, the country's second largest conglomerate after the
Salim Group prior to the 1997 financial crisis, borrowed
massively from BII at the time to help finance its aggressive
expansion programs.

According to previous reports, Sinar Mas had pledged various
fixed and equity assets, which, according to an initial
appraisal, was worth around Rp 23.1 trillion.

Among the assets pledged are factories and equipment under PT
Indah Kiat Pulp & Paper, PT Tjiwi Kimia, PT Pindo Deli Pulp &
Paper Mills, PT Lontar Papyrus Pulp & Paper Industry, PT Purinusa
Eka Persada.

Sinar Mas has also offered shares in publicly listed Indah
Kiat, Tjiwi Kimia, PT Duta Pertiwi PT Smart Corporation, in non-
listed PT Indomilk, Pindo Deli Pulp, PT Bumi Serpong Damai, PT
Henkel Indonesia.

But Ary Suta said the agency had yet to receive the shares in
Indah Kiat and Tjiwi Kimia.

"Those shares haven't been transferred yet," Ary Suta said.

The agency wants the group to hand over 27 percent of shares
in Indah Kiat and some 42 percent of stakes in Tjiwi Kimia.

The plans to seek additional assets from Sinar Mas, however,
may cause the jitters among the group's foreign creditors and
bondholders.

There are concerns that Sinar Mas' assets might have plunged
in value due to a combination of the economic crisis and falling
pulp prices on the international market.

Ary Suta also said IBRA was hopeful that it could install a
chief financial officer (CFO) in the group's operating companies
soon, in a bid to strengthen control over the group.