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)