Indocitra Finance to change its core business focus

Indocitra Finance to change its core business focus

JAKARTA (JP): Publicly listed multi-financing company PT
Indocitra Finance said on Thursday it was planning to convert
itself into an investment firm due to the gloomy outlook for its
present business activities.

Indocitra commissioner Glenn Gouw said the change in the
business focus was part of the essential business strategy to
keep its operation afloat.

"There is no hope for multi-finance companies such as us
without fixed funding sources like banks," Glenn told reporters
during a public expose held by the company.

Multi-financing firms are involved in leasing, factoring and
other investment activities.

Glenn said that Indocitra was one of the many multi-financing
companies that flourished during the early nineties. But with the
collapse of the banking sector in 1997, most of these companies
went out of business, he explained.

He said the company now only focused on recovering its loans
from existing clients.

"We don't extend new loans, it's too risky. We'll just
maintain our current ones," he added.

Glenn said the company had total debts of some Rp 36 billion
(about US$3.82 million), of which Rp 13 billion was owed to the
Indonesian Bank Restructuring Agency (IBRA).

He said the company must first complete its debt restructuring
negotiations, before it could proceed with its plan to become an
investment firm.

Under the plan, he said, Indocitra would become a holding
company with stakes in companies involved in various business
lines.

Indocitra would issue rights shares to raise funds for the
expansion plan.

Indocitra's president R. Soedaryatmo said that the company
planned to raise about Rp 33 billion from a rights issue this
year.

The company hopes to obtain the shareholders' approval for the
plan at a meeting scheduled for June this year.

But at present, Glenn continued, Indocitra was stuck with its
debt restructuring negotiations.

He said that IBRA was unsure how to restructure the debts of
multi-financing firms.

"We're negotiating on a one to one basis with IBRA, but we
must also wait until IBRA sets guidelines for multi-financing
debt restructuring," he explained.

According to him, IBRA has estimated that out of the 140
multi-financing firms, only 25 were suitable for debt
restructuring, including Indocitra.

"The others have just abandoned their operations, some owners
cannot be found," he explained.

For the third quarter last year, Indocitra booked a net loss
of Rp 455 million, down from Rp 652 million in the same period in
1999.

But its revenue dropped during the third quarter last year to
Rp 4.1 billion compared to Rp 5.3 billion in the same period the
year before.

Indocitra is 83.89 percent owned by PT Citra Sari Abadi, 3.16
percent by the Bank Bukopin cooperative, with the remaining 12.95
percent being owned by the public. (bkm)