Salim agrees to pledge more assets to IBRA

Salim agrees to pledge more assets to IBRA

Dow Jones, Jakarta

The Salim Group, formerly Indonesia's richest business
conglomerate, agreed to pledge more assets to the Indonesian Bank
Restructuring Agency if the proceeds from sales of the assets
that it has already pledged to the agency fall short of its debts
to the government, IBRA Chairman Syafruddin Temenggung said
Thursday.

The Salim group owes 53.2 trillion rupiah (US$5.8 billion) to
the government after the government bailed out PT Bank Central
Asia, which was ravaged by the 1997 Asian financial crisis. BCA
was Salim's financial crown jewel before the government took over
the bank in 1998.

Salim has pledged over 100 companies to IBRA to repay the
debts. However, there are concerns among legislators that the
sales of those assets won't generate the required Rp 53.2
trillion because the value of the assets has been declining
sharply since Salim pledged them in 1998.

The Indonesian parliament has pushed IBRA to seek more assets
from Salim to meet the shortfall.

IBRA has also found out that the value of the companies that
Salim had pledged to it was lower than the value it had
represented to the agency. IBRA calculated the difference was Rp
960 billion, which Salim must pay in cash. Salim has paid Rp 230
billion of this so far.

Syafruddin said the Salim group has agreed to complete the
repayment of the remaining Rp 730 billion by the middle of
October.

IBRA was established in January 1998 to restructure ailing
domestic banks and recover around Rp 600 trillion of funds the
government has spent to bailout local banks.