PT Danareksa joins INDRA to settle foreign debts
JAKARTA (JP): State-owned investment company PT Danareksa said on Friday that it has joined the Indonesian Debt Restructuring Agency (INDRA) in settling its foreign debts.
Danareksa corporate secretary Ticke S. Soekrani said Danareksa was the first company to join the INDRA debt relief scheme.
"INDRA's scheme will help Danareksa service its foreign debts with an adequate hedging facility," Ticke said.
He said the unavailability of the rupiah-U.S. dollar swap market had been a problem for Danareksa to have the necessary foreign exchange protection in paying its U.S. dollar denominated debt.
He said, however, only part of Danareksa's debts were included in the INDRA scheme.
"The debt amount under the INDRA scheme is worth US$147.5 million out of the total $196 million debt," he said.
INDRA's debt relief scheme offers a voluntary program to debt- laden companies in which their obligations will be extended by eight years and they will receive access to dollars at a locked- in rate. In return, they must resume making loan payments.
Debtors joining the scheme, however, must first seek approval from their lenders to reschedule the debts.
Danareksa reached a debt restructuring agreement with its foreign creditors in April, when Danareksa received a 46.5 percent debt haircut on its $366 million total debt.
INDRA's scheme, widely criticized for being inflexible, has modified a few features in its program to get a better reception from domestic companies undergoing debt restructuring.
Among the rigid features in the program is the requirement of debt restructuring to have eight-years rescheduling and a three- year grace period.
It also rules the interest payments paid by the debtors to INDRA are at the monthly inflation rate plus a 5.5 percent margin during the first three years.
Debtors were overwhelmed with the high interest rates which once reached over 70 percent in 1998.
INDRA chairman Sumitro said debtors now do not have to have an eight-year maturity as long as they can get a debt reduction or a debt equity swap from their creditors for at least 20 percent of the total loan.
He said for every 20 percent debt relief, the eight-year maturity period could be reduced by one year.
INDRA also set an interest payment cap of 1.25 percent of the total loan amount per month which is favorable in times of high inflation, Sumitro said.
Debtors can also sign up only for a partial of their debt included in the scheme, he added.
Sumitro also said INDRA extended the deadline for entry to its program from June 30 to Dec. 31, hoping to receive more debtor participants in the currently improving macroeconomic conditions.
Sumitro said the exchange rate used to convert private foreign debt for companies joining the agency in July was Rp 7,349 to the U.S. dollar.
He compared the exchange rate that was Rp 7,589 to the dollar in June.
"The higher than market exchange rate currently applied is because it is calculated using the average of the exchange rate over the last 20 working days, while the strengthening of the rupiah only happened in the last two weeks," he said.
INDRA is a government-sponsored agency established in August 1998 with the objective to help restructure the country's $66.9 billion in private-sector overseas debts.(udi)