IFC will retructure loans to Hotel Santika Nusajaya
JAKARTA (JP): The International Finance Corporation has agreed to restructure the debt of PT Hotel Santika Nusajaya, the property division of media giant Kompas Gramedia Group.
The IFC -- the private investment arm of the World Bank -- said in a statement released Thursday in Washington that the debt restructuring should "help Hotel Santika Jakarta to recover from the crisis with improved debt servicing capability."
Sami Haddad, IFC associate director for South and Southeast Asia, said in the statement that the deal should strengthen Hotel Santika's financial position "enabling it to better withstand the current economic crisis and lead the way to similar restructurings of other sound companies, a key to the recovery of Indonesia's corporate sector."
Hotel Santika Nusajaya is owned by PT Grahawita Santika, a hotel chain established in 1981 that operates nine hotels in Indonesia, including four-star Hotel Santika Jakarta on Jl. K.S. Tubun, Central Jakarta.
Hotel Santika Nusajaya obtained in 1996 US$27 million in loans from IFC and other international lenders to build Hotel Santika Jakarta.
Of this $27 million, IFC provided $14 million with a 10-year maturity, the Asian Finance and Investment Corporation -- an affiliate of the Asian Development Bank -- gave $3 million with an eight-year maturity.
Other creditors -- Deutsche Investitions und Entwicklungsellschaft GmbH of Germany and the Nederlanse Financiering-Maatschappij Voor N.V. of the Netherlands -- provided $5 million each.
The deal marks a breakthrough of sorts for the IFC, which has a $1 billion investment portfolio in Indonesia, currently spread over 42 companies. The portfolio consists of $150 million in equity investment and $850 million in debt financing.
Out of the $850 million debt, only about $350 million comes directly from IFC's own pocket -- the rest is in loans made by commercial banks in IFC's name.
According to Dow Jones Newswires, IFC believes about $100 million to $150 million of its debt financing extended to Indonesian companies is at risk of not being fully recovered.
The organization recently suffered a setback in its debt recovery campaign when the Supreme Court rejected an appeal by the IFC and other foreign creditors to declare PT Dharmala Agrifood bankrupt, dealing a further blow to the country's struggling bankruptcy law.
The IFC together with PT ING Indonesia Bank and Indonesia's PT Bank Niaga, filed an appeal petition to the Supreme Court after their initial bankruptcy claim against the listed Indonesian agricultural food producer was thrown out by the Jakarta Commercial Court in early December. (rid)