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)