No agreement on RI corporate debt plan: Banker

No agreement on RI corporate debt plan: Banker

NEW YORK (Reuters): Global bankers have not reached any arrangement that would allow debt-laden Indonesian companies to postpone the repayment of capital, but a restructuring program is being considered, a banker involved with the talks said Wednesday.

"It's premature to think that the banks have agreed on any formulation at this stage," the banker said. "It's premature to think that any formal decisions have been made."

Japan's Nihon Keizai Shimbun newspaper reported on Wednesday that Standard Chartered, which headed the bank committee, had crafted a plan to allow Indonesian firms to postpone principal repayments for six months, but maintain interest payments.

Standard Chartered declined to comment on the report. But the story of a postponed principal payment seemed to be consistent with a 1983 Mexican restructuring program that Jakarta reportedly has been studying.

Mexico implemented the "Ficorca" program to defray the impact of a massive 1982 peso devaluation on its corporations, by allowing them to repay their debt in pesos rather than dollars to the Ficorca, which then paid foreign creditors.

Ficorca restructured the corporate debt over an eight-year period, but only made interest payments over the first four years, and began repaying capital after four years.

The banking source said many creditors view a Ficorca-type solution as a potential antidote to Indonesia's crisis, in which hundred of companies have been unable to pay their debt because of a dramatic fall in the rupiah.

"Something they're looking at is a mechanism to provide the foreign exchange to service debt, but how you go about doing that remains to be seen," the banking source said.

In Jakarta, Indonesia's presidential advisor on private debt, Radius Prawiro, said yesterday that more meetings were necessary to find a suitable solution to Indonesia's $68 billion private foreign debt overhang.

After receiving a proposal from Standard Chartered's David Brougham, who heads the committee representing interests of the country's foreign lenders, in a meeting yesterday, Radius said talks will continue today.

Radius refused to reveal the differences between the plan proposed by the committee representing the Indonesian debtor companies and that proposed by Brougham. But when asked if a Mexican-style Ficorca plan was the backbone of both proposals, he said 'there are elements that are similar.'

'We must study the proposals and review their substance, before knowing what the outcome will be,' Radius said without giving any specifics on timing.