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.