IBRA strikes landmark deal with Bakrie Nirwana Resort

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) announced late on Thursday a landmark deal in restructuring the debt ridden PT Bakrie Nirwana Resort (BNR).

IBRA deputy chairman Eko S. Budianto said the restructuring of BNR's US$133 million in principal owed to the agency involved a debt-to-equity swap and the participation of French hotel operator Le Meridien as a strategic investor.

"This is the most ideal debt restructuring model because it involves a strategic investor," Eko announced at a news conference.

IBRA signed a memorandum of understanding on Tuesday. The final deal is expected to be signed in January.

"Basically they've agreed on the principle," Eko said.

He explained that under the restructuring deal, IBRA would end up with a 51 percent stake in BNR, and convertible bonds which would raise the agency's stake in the firm to 79 percent if the bonds were converted to equity.

He added that Le Meridien had agreed to invest $5 million for a 5 percent stake in BNR.

Eko said the restructuring deal left BNR with a remaining 32 percent of its debts on its balance sheet.

He also said the agency agreed to lock-in its BNR investment for a six-month period because the resort was not fully completed.

"BNR initially forced us to lock-in our investment for a year, but we have budget pressure," he said, adding that the agency aims to raise Rp 17 trillion in cash in the current fiscal year ending in March 2000 to help finance the country's bank restructuring program.

He said that if IBRA wanted to sell its stake in BNR, the firm's founder would be given a month to decide whether it would repurchase its stake in the firm.

Eko said the remaining 32 percent principal debt would be restructured in 10 years, while 50 percent of the interest arrears would be restructured in five years.

IBRA has set a 12 percent interest rate on the $133 million BNR debt.

The BNR debts were transferred to IBRA by several closed down or recapitalized banks including Bank Central Asia, Bank Rakyat Indonesia and Bank Pembangunan Indonesia.

BNR is owned by the well-diversified Bakrie Group and is one of the group's 26 firms that owe a huge amount of debt to the agency.

IBRA senior official Bambang Sudibyo said the agency was also progressing in the restructuring of PT Bakrie Seamless Pipe Indonesia Jaya, which owes $127 million in principal to the agency.

"We expect to strike a deal soon," he said.

He said IBRA had yet to conduct a financial due diligence audit on the remaining firms to decide the exact amount of the debts of the companies.

Bambang said the agency had also just completed a financial audit on publicly listed PT Bakrie & Brothers, which owes $113 million.

But Eko said the restructuring of the debts of Bakrie & Brothers would be very difficult because the company also owed about $900 million to some 150 foreign lenders, mostly in floating rate notes.

IBRA is in control of more than Rp 230 trillion worth of bad loans transferred by closed down banks, nationalized banks and recapitalized banks.

The agency must restructure the bad loans to revive the real sector and to raise funds for the government bank restructuring program.

The agency started disclosing last week the progress of the debt restructuring of its 20 largest debtors under one related business group.

The Bakrie Group is IBRA's fourth largest debtor. (rei)