Prajogo pledges 20 companies for debt restructuring

Prajogo pledges 20 companies for debt restructuring

JAKARTA (JP): Prajogo Pangestu has pledged 20 companies to the
Indonesian Bank Restructuring Agency (IBRA) as part of his debt
restructuring deal with the government, Financial Sector Policy
Committee (FSPC) secretary Syafruddin Tumenggung said on Friday.

Syafruddin said the 20 companies included publicly listed
timber companies PT Barito Pacific Timber, and PT Tanjung Enim
Lestari and non-listed PT Musi Hutan Persada.

Syafruddin, however, said the FSPC had asked the indebted
timber tycoon to first restructure the overseas borrowings of
Barito to make the three companies acceptable to the government.

Speaking to reporters following a meeting of the committee, he
said that Prajogo had pledged the three companies to Barito's
foreign creditors.

"If Prajogo reaches a restructuring deal with (Barito)
creditors, the three companies will be set free (from the hands
of foreign creditors)," he said.

"We have asked Prajogo to restructure the Barito debt through
the mediation of the Jakarta Initiative Task Force," he added.

The committee, which groups several senior economic ministers,
has the final say in major corporate and bank restructuring
programs.

The government has demanded Prajogo provide additional assets
as part of the debt restructuring for petrochemical giant PT
Chandra Asri Petrochemical Center with IBRA.

Chandra Asri owes IBRA, a unit of the finance ministry, about
Rp 3 trillion. The agency received the bad debts from ailing
domestic banks. IBRA is mandated to recover and restructure the
bad debts of domestic banks.

The petrochemical giant also owes about US$700 million to a
consortium of foreign creditors led by Japanese Marubeni Corp.

Under the debt restructuring plan of Chandra Asri, the
government agreed to convert part of its loan into a 31 percent
stake in the company.

Under the deal, Marubeni will end up with a 20 percent stake
in Chandra Asri, while company founder Prajogo will have a 49
percent stake.

The debt restructuring process of Chandra Asri has been moving
at a slow pace.

Elsewhere, Syafruddin said the FSPC had also asked Prajogo and
IBRA to continue negotiations with Marubeni to lower the interest
rate of the Chandra Asri debt to the foreign creditors.

Marubeni agreed earlier this week to lower the interest rate
of the Chandra Asri debt to 1.5 percent above the London
Interbank Offered Rate (Libor), but Syafruddin said the FSPC
wanted the rate to be at par with Libor.

"FSPC has asked IBRA and Prajogo to continue negotiations with
Marubeni to have better terms and conditions so that Chandra Asri
will become a healthy and strong company in the future,"
Syafruddin said.

Meanwhile, IBRA senior official Thomas Lembong said the agency
was "on track" to meet its target to raise Rp 18.9 trillion in
cash for the 2000 state budget, which will end later next week.

IBRA raised the cash through the sale of its various banking
assets and the recovery of the bad loans under its management.

The agency last sold the Salim Group plantation firms to
Malaysia's Kumpulan Guthrie for $350 million. (rei)