IBRA to take legal action against 17 debtors
IBRA to take legal action against 17 debtors
JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
said on Wednesday that it would immediately take legal action
against 17 "uncooperative" debtors owing combined bad debts of Rp
3.86 trillion (about US$515 million) and $770.05 million to the
agency.
IBRA senior legal counsel Agustinus S. Nugroho said the 17
indebted companies failed to sign letters of commitment for debt
rescheduling by the Aug. 31 deadline.
"The only alternative left for us is to take legal action
against them," he told reporters at a media gathering.
He said the legal action included bankruptcy measures and
seizure of assets by force.
Some 200 of the agency's largest debtors owing some Rp 70
trillion had been given until Tuesday to sign letters of
commitment, which are agreements to cooperate with IBRA in debt
restructuring.
The uncooperative debtors are multifinance firms PT Putra
Surya Multidana and PT Primaswadana Perkasa Finance; property
firms PT Putra Surya Perkasa, PT Samurindoswadaya Sejahtera, PT
Sinar Slipi Sejahtera, PT Staco Graha and PT Mas Murni Indonesia;
holding companies PT Inter Petrindo Inti Citra, PT Mitra Laras
Serasi, PT Estika Yasa Kelola and PT Staco Arta Karya; plywood
producer PT Dayak Besar Agung Corporation; transportation firm PT
Sempati Air; white carbon firm PT Tensindo Sejati; automotive
firm PT Gemala Industries Ltd.; textile producer PT Ekadharma
Garmentama; and trading firm PT Dharmasakti Pancagraha.
IBRA is a unit of the finance ministry tasked with raising
fresh funds to help finance the government bank recapitalization
and restructuring costs, estimated to reach Rp 550 trillion.
One source of proceeds is from the recovering of bad debts of
the country's banks which have been transferred to the agency.
IBRA deputy chairman Eko S. Budianto said some Rp 203 trillion
in bad debts owed by 140,000 debtors had so far been transferred
to the agency.
He expected the agency to control at least Rp 230 trillion in
bad debts.
He said that bad debts from 38 banks closed down last year,
and from six nationalized banks Bank Nusa Nasional, Bank Niaga,
Bank Bali, Bank Duta, Bank Jaya and Bank Rama had yet to be
transferred.
Eko acknowledged the high profile Bank Bali scandal had slowed
down the debt restructuring process, particularly in negotiations
with large debtors.
"Much of the negotiation process with large debtors which
previously went smoothly has slowed down," he said, without
mentioning the reasons.
Eko, however, said that negotiations with smaller and medium-
size indebted companies had been relatively undisrupted.
He said some Rp 1.9 trillion in bad debts had been recovered
from small debtors.
Eko also said that despite the disruption, he was optimistic
that the target to raise Rp 17 trillion in the current fiscal
year ending in March 2000 could be achieved.
In addition to debt recovery, the agency is also expected to
raise large sums of money from the sale of stakes in various
companies surrendered by indebted former bank owners, and from
the divestment of stakes in recapitalized or nationalized banks.
But Eko said the agency would have to raise more than Rp 17
trillion in the following years to help finance the costly bank
restructuring program.
He said that out of the second 600 group of large debtors, 89
had so far been uncooperative.
"We expect the number of uncooperative debtors to decline over
time," he said.
The 89 uncooperative debtors have until Sept. 30 to sign
letters of commitment before the agency takes legal action.
Eko also said that final debt rescheduling negotiations with
19 debtors owing some Rp 13 trillion was currently underway.
"We expect to immediately complete negotiations," he said.
He added that 10 debtors owing some Rp 10 trillion in bad
debts had submitted their debt restructuring proposals to the
agency.
Eko also said the agency had no authority to provide debt
reductions.
"The debtors are demanding that we give them debt cuts, but
its not within our authority," he said, adding that even the
finance minister did not solely hold such an authority.
He pointed out that a 10 percent debt reduction (out of the Rp
230 trillion in bad debts) would amount to more than Rp 22
trillion.
Eko said the only alternative to minimize the burden of debt
was through debt equity swaps.
Eko said the agency had asked cooperative debtors to pick
their own international appraisers to value their companies'
assets for the purpose of debt to equity swaps.
He also said it would be impossible for the agency to
subsidize the interest rate of debts.
Several debtors have urged the agency to lower the interest
rates of their debts to encourage debtors to restructure their
debts, particularly amid the declining interest rate environment.
(rei)