Salim Group repays 70 percent of IBRA debt

Salim Group repays 70 percent of IBRA debt

The Jakarta Post, Jakarta

The Salim Group has repaid 70 percent of the Rp 729.4 billion
(about US$81 million) it owes the Indonesian Bank Restructuring
Agency (IBRA) for the shortfall in assets it pledged to IBRA, an
official at the agency said on Tuesday.

IBRA Asset Management Investment head Taufik Ma'ruf said the
70 percent, or Rp 510 billion, was paid in cash, assets and with
2 percent of the total BCA shares, of which Salim still owes 7
percent.

"We'll wait for the remainder, while processing the necessary
documents," Taufik said.

The payment was agreed on at a meeting on Monday night -- the
deadline Taufik had given Salim to repay its debts.

In total, the group owes IBRA some Rp 58 trillion for bailing
out BCA during the 1997 financial crisis.

IBRA injected BCA with recapitalization bonds to replace the
bank's depleting assets during the crisis.

Payment on these bonds amounts to around Rp 5 trillion a year
and is covered by the state budget.

Salim agreed to repay the debt under the Master of Settlement
and Acquisition Agreement (MSAA), under which IBRA has sold off
Salim's assets.

Indonesia's once-largest conglomerate unwound several of its
most coveted assets, including majority shares in BCA, car
manufacturer PT Astra International and in television
broadcasting company PT Indosiar Visual Mandiri.

PT Holdiko Perkasa, the holding company managing Salim assets
under IBRA, aims to raise another Rp 3.2 trillion from selling
remaining assets. These mainly cover properties such as PT
Metropolitan Kencana, which owns Wisma Metropolitan and Pondok
Indah Mall, real estate at Bumi Serpong Damai and several resorts
in Bintan.

These and other assets, however, have over time shrunk in
value, although the MSAA does not require Salim to cover the
resultant shortfall.

On demands from legislators, the group agreed to pledge more
assets and subsequently settled Rp 100 billion of the shortfall
in cash before Monday's additional payment.

IBRA has said it wants the shortfall to be paid 60 percent in
cash and 40 percent as BCA shares.

The group is believed to have several assets stashed away in
neighboring countries. Reports have also surfaced of its plans to
purchase a 45 percent stake in Chinese property firm Zhongyuan
for $500 million.

There has been no confirmation yet from Salim and IBRA said it
was not aware of such a plan, but added the group should first
settle its debts to the agency.

The Salim group is one of several debtors whose asset
shortfalls, linked to their 1998 debt deals, IBRA has asked to
cover.

From them, IBRA has targeted another Rp 6 trillion by year-
end, as part of meeting its annual revenue target now set at Rp
42.8 trillion.

So far the agency has sold Rp 16.5 trillion-worth of assets
and another Rp 23 trillion through its sales of nonperforming
loans that it took over from ailing banks during the crisis.