Marubeni to reduce interest rate of Chandra Asri debt

Marubeni to reduce interest rate of Chandra Asri debt

JAKARTA (JP): Japan's Marubeni Corp. has agreed to lower the
interest rate of the debt owed by the local petrochemical giant
PT Chandra Asri, according to Coordinating Minister for the
Economy Rizal Ramli.

Rizal said on Tuesday that the interest rate had been lowered
to 1.5 percentage points above Libor (London Interbank Offering
Rate) from the previous level of 2.5 percentage points.

"This should help Chandra Asri... to have a more sustainable
cash flow," he told reporters following a meeting with Marubeni
vice president Takeo Watanabe.

The government earlier demanded that Marubeni reduce the
interest rate to as low as zero percent.

Rizal did not provide further explanation.

Chandra Asri owes around US$700 million to a foreign creditor
consortium led by Marubeni. The company also owes around Rp 3
trillion to the Indonesian Bank Restructuring Agency (IBRA),
which received the bad debt from ailing domestic banks.

The government has recently approved the debt restructuring of
Chandra Asri under which IBRA would convert part of its loan into
a 31 percent stake in the company, while Marubeni would convert
part of its loans into a 20 percent equity.

Chandra Asri's founder Prajogo Pangestu would take the
remaining stake in the company.

The government had earlier demanded that Marubeni lower the
interest rate as part of the debt restructuring deal.

The government also asked Marubeni to extend the repayment
period of the Chandra Asri debt to 15 years from 12 years, and
demanded the foreign creditor to take a greater equity in Chandra
Asri.

The government, via the Financial Sector Policy Committee
(FSPC) which groups several senior economic ministers, has also
demanded that Prajogo surrender more of his personal assets as
part of the restructuring deal.

The FSPC last week rejected the assets surrendered by Prajogo
saying that they were not acceptable to the criteria set by the
committee.

The government has given Prajogo until Wednesday to surrender
his assets.

The FSPC has the final say on the country's major bank and
corporate restructuring program. (rei)