IBRA vows to execute FSPC decision

IBRA vows to execute FSPC decision

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
pledged on Tuesday to fully implement the decision of the
powerful Financial Sector Policy Committee (FSPC) on the
restructuring of the massive debt of petrochemical giant PT
Chandra Asri.

"It's the decision of the FSPC, why should it not be
implemented?... We're only the executor," IBRA deputy chairman
Irwan Siregar told reporters following a meeting with the FSPC.

"We have no objection," he added.

Asked whether IBRA was unhappy with the final debt workout
scheme approved by the FSPC, Irwan said: "The decision of the
FSPC has been made based on thorough consideration, while IBRA's
view is based only on commercial consideration."

He declined to provide further comments.

Irwan was commenting on a Tuesday report in this paper quoting
sources as saying that the debt restructuring of Chandra Asri
could fall apart due to IBRA's disappointment over the FSPC
scheme.

The FSPC groups several senior economic ministers and has the
final say on the country's major corporate restructuring program.
The committee is led by Coordinating Minister for the Economy
Rizal Ramli.

Rizal said last week that Japan's Marubeni Corporation,
Chandra Asri's leading foreign creditors, had agreed to the terms
set by the FSPC over the restructuring of Chandra Asri's US$730
million foreign debt.

Rizal called on IBRA to expedite the finalization process of
the technical details of the debt restructuring agreement with
Marubeni.

Informed sources said more than 50 documents would have to be
drawn and signed by shareholders and creditors to complete all
the technical details of the debt-restructuring scheme.

But IBRA chairman Edwin Gerungan was quoted late last week by
the media as saying that he was unhappy with the deal, pointing
out that Marubeni should have converted more of its loans into
equity stake in Chandra Asri.

Under the FSPC final scheme, Marubeni will only convert $100
million of its $730 million loans into 20 percent equity shares
in Chandra Asri, while the remaining debts would be rescheduled
to 15 years with annual interest floating 1.5 percentage points
above the London Interbank Offered rate (Libor).

IBRA is set to convert $375 million, of the $425 million loans
it took over from domestic banks, into a 31 percent share
ownership and leave the remaining $50 million as an outstanding
loan to Chandra Asri, making IBRA also a creditor at the company.

The remaining 49 percent of the petrochemical company will be
owned by founding shareholder, Prajogo Pangestu.

The final debt workout was decided by the FSPC and was
approved in June and November last year by President Abdurrahman
Wahid mainly in terms of the interest rate, maturity of debt, and
IBRA's creditor status. Under the initial plan, Marubeni would be
the sole creditor of Chandra Asri.

IBRA and the FSPC had been involved in 19 months of
negotiations with Marubeni to revise the earlier MOUs, which
sources said involved high level political lobbyings by both
Indonesia and Japanese governments.

IBRA's Edwin has often said that the agency wants to see
Marubeni converting more of its loans into greater equity shares
in Chandra Asri, rather than lowering the interest rate from 2.5
percentage points above Libor or extending the maturity of the
debt from 12 years to 15 years.

But as the negotiation process with Marubeni dragged on, the
FSPC decided to take over the process, leaving IBRA in the back
seat, sources said.

Marubeni chief operation officer in Indonesia T. Murakami told
The Jakarta Post on Monday that foreign creditors decided to
accept the terms set by the FSPC in "good faith," to allow the
restructuring of Chandra Asri's debts be completed as quickly as
possible.

Murakami stressed that quick finalization of the debt
restructuring is vital to saving Chandra Asri, warning that
further delays in finalizing technical details could severely
damage the West Java-based olefins center as it could run out of
cash and stop production by the end of next month.

"If this happened, Chandra Asri would lose its customers to
other competitors in Thailand, Singapore or Malaysia," he
cautioned. (rei)