Marubeni's debt restructuring plan rejected

Marubeni's debt restructuring plan rejected

JAKARTA (AFP): The Indonesian government has rejected a
proposal by Japan's Marubeni Corp to become the single creditor
in a debt restructuring deal for petrochemicals company PT
Chandra Asri, an official said Tuesday.

"They (Marubeni) want to be the single creditor, but we can't
accept that," said Safrudding Tumenggung, secretary of the
Financial Sector Policy Committee (KKSK), a government body
tasked with reviewing the policies of the Indonesia Bank
Restructuring Agency (IBRA).

Tumenggung said the proposal would expose IBRA to a larger
than planned debt-to-equity swap, suggesting that as a mere
shareholder IBRA would lose strategic control over the
petrochemical plant.

IBRA and a number of foreign financial institutions grouped in
a consortium led by Marubeni, which is a part owner of the joint-
venture olefins company, are the major creditors of Chandra Asri.

They have respective loan exposures of Rp 3 trillion (US$288.5
million) and $700 million to Chandra Asri.

Talks on the Chandra Asri debt restructuring deal have dragged
on among creditors, with no proposal yet acceptable to both
Marubeni and IBRA.

"We are still negotiating," Tumenggung added.

An IBRA source said Marubeni was reluctant to take too large a
portion of the debt-to-equity swap, as it will effectively hold a
significant equity stake in Chandra Asri, which would mean the
Japanese firm would have to provide extra cash for such a high
risk investment.

The source said IBRA chairman Edwin Gerungan has been under
significant pressure from outside IBRA to agree to an alternative
debt restructuring scheme, which would bar Marubeni from taking a
significant portion of Chandra Asri's equity, thus transferring
all the burden to IBRA instead.

"Gerungan has told us that he would rather resign than sign
such an imbalanced debt restructuring deal as proposed by
Marubeni," the source added.