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)