Kiani Kertas' debts to be restructured

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) expects to complete restructuring the debts of PT Kiani Kertas, a pulp manufacturer owned by Mohamad "Bob" Hasan, within six months.

IBRA official Ronald Sinaga said on Tuesday afternoon Kiani Kertas' debts were the most difficult to restructure among 15 indebted companies partly owned by Bob Hasan which had fallen under the agency's control. He said the difficulty arose because the company owed over US$110 million to foreign creditors, led by Japan's Sumitomo.

"We expect the debt restructuring of Kiani Kertas to be completed in six months time from December. We have talked this over with the foreign creditors," Sinaga said.

Kiani owes some Rp 2.5 trillion ($357 million) in nonperforming loans, which IBRA took over from recapitalized or closed banks.

Sinaga said JP Morgan had been appointed the company's financial adviser and was expected to come up with an initial debt restructuring proposal next week.

He also said Ernst & Young had been appointed to audit Kiani's plants.

Sinaga said restructuring Kiani's debts was a slow process in part because its plants suffered technical troubles.

Sinaga said restructuring the debts of the other companies partly owned by Bob Hasan would take little time because they did not have any debts to foreign creditors.

Bob Hasan's 15 companies have debts totaling $487.3 million and Rp 1.22 trillion, all of which was taken over by IBRA.

Irwan Siregar of IBRA said 14 of the companies had signed letters of commitment to restructure their debts.

Only gas container manufacturer PT Kemgas Tama was uncooperative, Siregar said, adding that the company was now in the process of being liquidated.

Kemgas has debts of some Rp 23.45 billion.

Siregar said the 15 indebted companies partly owned by Bob Hasan, a long-time golfing partner of former president Soeharto, were divided into two groups: the Nusamba Group and the forestry division.

Bob Hasan owned some 20 percent of the companies in the Nusamba Group, while the remaining shares were held by three foundations controlled by Soeharto, he said.

Siregar said restructuring the debts of the Nusamba companies was slow because the three foundations had been handed over to the coordinating minister for people's welfare and poverty alleviation.

Sinaga added that the forestry division had 13 companies, including Kiani Kertas and plywood producer PT Kalimanis Plywood Industries.

He said the economic crisis adversely affected these two companies, which impacted negatively on the 11 supporting firms in the forestry division.

Sinaga added that the main problem of the plywood mills in the forestry division was their heavy debt burdens. (rei)