PAL needs more capital

JAKARTA (JP): State-owned shipbuilder PT PAL has asked the government to convert its long-term loan of Rp 790 billion (US$334.7 million) to the company into equity, according to an executive of the Management Board for Strategic Industries.

Giri Suseno told a hearing of Commission X for development planning on Wednesday that PAL needed additional capital to grow.

PAL's assets were worth Rp 1.6 trillion (US$677 million) on Dec. 31, 1995, while its liabilities were Rp 1.4 trillion.

PAL vice president Suleman Wiriadijaya admitted that his company's financial structure was poor with its long-term loans accounting for more than 50 percent of its total debt.

"Our assets have reached Rp 1.7 trillion and our capital is Rp 8 billion. We keep borrowing money and our interest payments are as high as Rp 30 billion annually. Basically, we work for the bank," Wiriadijaya said.

In 1995, PAL made Rp 190 billion in revenue and suffered a loss of Rp 18.9 billion. (10)