IBRA to resume talks with Marubeni over Chandra Asri debt

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) plans to start fresh negotiations with Japanese Marubeni Corp. early next week over the crucial restructuring of petrochemical giant PT Chandra Asri's debt, according to a senior official at the agency.

IBRA deputy chairman Irwan Siregar said that the agency was expected to reach a new deal with Marubeni.

"We'll start fresh negotiations with the Japanese side on Monday," Irwan told reporters during a gathering at the agency's headquarters.

He did not provide details on what was to be renegotiated with Marubeni.

But sources said that the powerful Financial Sector Policy Committee (FSPC) has demanded a lower interest rate, longer maturity period, greater equity participation by Marubeni, and a commitment from the Japanese conglomerate to provide working capital for Chandra Asri.

FSPC groups several senior economic ministers and has the final say on the country's major corporate and bank restructuring program.

Chandra Asri owes some US$700 million to a foreign consortium led by Marubeni. The petrochemical company owes another Rp 3 trillion to IBRA, but the restructuring of this local debt has already been agreed.

The agency received the local Chandra Asri debt from ailing domestic banks when the country's economic and banking crisis worsened.

IBRA reached agreement with Marubeni on restructuring of Chandra Asri debt in June 2000, but the new FSPC team has demanded a revision of the first MoU, which expired at the end of last year.

Under the previous MoU, the government agreed to convert the local debt into 80 percent ownership in Chandra Asri, while Marubeni agreed to convert $100 million debt into a 20 percent stake.

But that restructuring plan received strong criticism, mainly because of risk that the government would be responsible for future Chandra Asri liabilities because of its majority stake in the company.

In December last year, the FSPC reached a new agreement with Chandra Asri founder Prajogo Pangestu to retain 49 percent interest in the company, and the government a 39 percent stake.

Marubeni agreed in December to lower the interest rate of Chandra Asri debt to 1.5 percentage points above Libor (London Interbank Offering Rate) from the previous 2.5 percentage points.

"But the government wants a lower rate," said a source.

"The government also wants the maturity period of the Chandra Asri foreign debt to be extended from 12 years," he added.

The FSPC has demanded a 15-year maturity period.

Elsewhere, Irwan said that Prajogo had agreed to surrender more personal assets as part of the restructuring deal with IBRA.

He said that although some of the assets had been pledged to other creditors, IBRA wanted to have a second mortgage status in which the remaining proceeds from the sale of the assets could be pledged to the agency.

Earlier, the FSPC said that Prajogo had agreed to surrender his ownership in around 20 companies to IBRA. The companies included publicly-listed timber firms PT Barito Pacific Timber and PT Tanjung Enim Lestari, and non-listed PT Musi Hutan Persada. (rei)