IPTN may not be able to repay debts: IBRA

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) said on Wednesday that the Indonesian National Aircraft Manufacturer (IPTN) might not be able to repay its debts without financial support from the government.

Group head of the agency's loan collection division Mohammad Syahrial said that IPTN's debts were too high compared to its future revenues.

"Low sales will make it difficult for the company to repay all its debts - unless the government backs up the debt restructuring," Mohammad said in a press conference.

He said the government as a shareholder could either inject new funds or consider the privatization of IPTN.

The state company has been placed under IBRA since March last year, with outstanding debts amounting to Rp 2.1 trillion (US$2.4 billion).

IPTN has came under public pressure for pushing its heavily capitalized projects such as the N-250 turboprop airplane.

However, these had been the pet projects of former President Soeharto, who gave full financial support until the International Monetary Funding (IMF) ordered in 1998 an end to the subsidy.

The company recorded a net loss of Rp 1.7 trillion in 1999.

Mohammad said that IBRA was currently evaluating the prospects of IPTN's business with a financial due diligence process underway.

"We've appointed an independent accountant," he said.

IBRA's press statement said it had approved independent accountant Ernst & Young and Deloitte Touche as IPTN's financial advisor.

IBRA expected to complete IPTN's debt restructuring proposal, business plan and its due dilligence by the end of next month.

He said the agency would look on whether IPTN's debts were sustainable in that they could be fully recovered within 10 years.

According to him, it was possible that IPTN would face liquidation if could not settle its debts in 10 years.

"But the question is whether the government is willing to liquidize IPTN," he said.

He said if IPTN were a private company instead, IBRA could searched for potential investors.

IBRA, Mohammad said, would have to coordinate with the State Ministry's office of Investment and State Enterprise Development as well as the Ministry of Finance.

The state company was now working on meeting orders of eight airplanes of the CN-235 type, with a project value of $143.4 million, IBRA said.

Aside from manufacturing air planes, IBRA reported that IPTN also produce helicopters and spare parts for the United States air plane manufacturer Boeing. (bkm)