Probosutedjo backs out of Dayak Besar deal
Probosutedjo backs out of Dayak Besar deal
JAKARTA (JP): Businessman Probosutedjo, who agreed last year to take over the debt-ridden timber companies of PT Dayak Besar Group (DBG), has decided to back out of the deal because the company's debts are too much for him to handle.
Probosutedjo said he was unable to meet the conditions requested by state-owned Bank Rakyat Indonesia (BRI) -- to which DBG owed about Rp 200 billion (US$87.33 million) -- despite several rounds of discussions with the bank's management.
"I am backing off. If there is any who wants the deal, they are welcome to go ahead," he said as quoted by Antara over the weekend.
Probosutedjo, after meeting with Minister of Forestry Djamaludin Suryohadikusumo, said BRI made an "extremely difficult" request when it asked him to pay DBG's debts, in spite of the fact that most of DBG's forest were overlogged.
He said he had originally agreed to pay all of DBG's debts if its forest were still intact.
"But it turns out I have to pay those huge debts with nothing left of the forests to manage. Where would I get the money?" said Probosutedjo, who is a half-brother of President Soeharto.
Although he agreed that all losses of state funds must be reclaimed, he argued that both BRI and the Ministry of Forestry should figure out a realistic way of getting the funds back.
DBG, which is partially controlled by businessman Yusuf Hamka, was reported last April to have defaulted on its debts of about Rp 350 billion. Debts of Rp 200 billion were owed to BRI and the remaining Rp 150 billion to a number of private banks.
DBG, which controls forest concessions of around 200,000 hectares and a number of timber mills in East Kalimantan, was also said to owe a large sum of money -- including unpaid reforestation funds -- to the government.
Although the company was declared bankrupt last year, because its debts outweighed its assets, an appraisal by PT Maharani Dharma Sakti confirmed that the assets of the timber group in Samarinda, East Kalimantan, excluding logging equipment, reached about Rp 240 billion. Meanwhile, DBG's total assets were estimated at Rp 500 billion.
The company's poor forest management prompted the government to ban two of its subsidiaries, PT Dayak Besar Vincent Timber Co. and PT Gelora Dayak Besar, from transporting their logs and sawn timber from their forest concessions in East Kalimantan to their wood-based industries.
About a month after the case was disclosed, Probosutedjo stepped in and agreed to takeover the company's debts. However, he was later uncertain of the deal and conceded that his company needed several months to determine how to repay DBG's large debts.
To solve DBG's problem, Probosutedjo said, the Ministry of Forestry must extend the company's concession term, while BRI must approve a moratorium on its debt installments and interest payments. Without either one, he said, it would be impossible to revive the company.
According to the Ministry of Forestry, DBG's concession ended in 1992, but the ministry issued a temporary extension under the condition that DBG establish a joint venture with a state-owned forestry firm.
However, DBG was later accused of backing out of the deal unilaterally when it closed down its office. Afterwards, DBG's concession was no longer extended.
Probosutedjo, who is chairman of the automotive-Garmak group, presently also holds the concessions for an industrial timber estate in South Kalimantan. The estate, managed jointly by PT Menara Hutan Buana and state-owned PT Inhutani II, is expected to provide raw material for a pulp mill. (pwn)