IBRA sets deadline for Chandra Asri

IBRA sets deadline for Chandra Asri

JAKARTA (JP): Deputy chairman of the Indonesian Bank
Restructuring Agency (IBRA) Eko S. Budianto said on Wednesday
that the fate of the debt-ridden petrochemical company PT Chandra
Asri would be decided by the Financial Sector Action Committee
(FSAC) if a debt restructuring agreement could not be reached
with the company's Japanese creditors by the end of this year.

"The deadline is the end of December. After that (if no
restructuring deal is reached) it will be decided by the FSAC
because (Chandra Asri) is a strategic project," Eko told a press
conference.

The FSAC is the supervising committee of the country's
economic restructuring program whose members include senior
economic ministers plus the Attorney General.

Eko admitted that the debt restructuring process of Chandra
Asri had been hindered by a continuing disagreement with the
Japanese creditors and differences of views on how to value
Chandra Asri's assets.

Chandra Asri is IBRA's largest single debtor, owing some
US$932 million. The company received loans from domestic banks in
1991, but after the banks suffered financial distress the loans
were transferred to IBRA.

In addition, Chandra Asri also owes money to its Japanese
shareholders as well as creditors.

Chandra Asri's local shareholders include Bambang Trihatmodjo
(the son of former president Soeharto), Prajogo Pangestu, Peter
F. Gontha and Muhammad Tachril.

"We're still in the negotiation process," Eko said, adding
that the main problem was sharply differing opinions between IBRA
and the Japanese creditors.

Eko explained that IBRA had agreed to extend part of Chandra
Asri's debts and to restructure the other part through a debt to
equity swap.

"But we also want the foreign creditors to share the pain,"
Eko said, adding that the Japanese creditors led by Marubeni had
so far declined to convert its loans into equity.

Eko said the Japanese creditors instead asked IBRA to convert
the loans into government equity in Chandra Asri under a deal
whereby the government would become the debtor while the
creditors would seek a cheaper loan for Chandra Asri.

"We don't like this because it would become a burden to the
state budget," he said.

Eko said that negotiating with the Japanese creditors would be
tricky because a botched handling might risk losing Japanese
government loan assistance under the so-called Miyazawa Plan.

Eko said that in order for Chandra Asri to survive, its debt
level must be reduced to at least $500 million.

IBRA, an agency under the finance ministry, has been
criticized for its slowness in restructuring the huge Rp 235
trillion in bad loans under its management.

Against this background, Finance Minister Bambang Sudibyo
officially installed on Wednesday Cacuk Sudarijanto as IBRA's
senior vice chairman -- a newly created position.

But Cacuk's appointment has been opposed by some legislators
because of his perceived close association with the Democratic
People's Party (PRD).

Cacuk vowed on Wednesday that he would not be working for the
interests of any political party.

Separately, IBRA chairman Glenn S. Yusuf said on Wednesday
that the agency would open bidding for its 30 percent stake in
the publicly listed car maker PT Astra International next week.

He said that the opening price for the bid would be based on
the prices offered by U.S. investment firms New Bridge Capital
and Gilbert Global Equity Capital.

Glenn's statement followed an earlier criticism from the
Coordinating Minister for Economy, Finance and Industry Kwik Kian
Gie that IBRA had been slow in selling its assets, and urged the
agency not to wait for more time to sell them.

The agency is targeted to raise Rp 17 trillion in the current
fiscal year ending in March to help finance the country's bank
reform. IBRA has so far raised Rp 10.3 trillion. (rei)