Salim, Nursalim agree to settle Rp 78t debts

Salim, Nursalim agree to settle Rp 78t debts

JAKARTA (JP): The government said on Tuesday that the Salim
and Gajah Tunggal groups had agreed to settle Rp 78 trillion
(US$7 billion) in debts belonging to failed banks they controlled
by ceding shares in almost all their global investments to the
government.

The Salim Group, the former controlling shareholder of the
nationalized Bank Central Asia, pledged assets totaling Rp 48
trillion to repay Rp 35 trillion in Bank Indonesia (BI) liquidity
support and pledged a further Rp 13 trillion to cover intra-group
loans, the Indonesian Bank Restructuring Agency (IBRA) said in a
statement.

It added that Rp 30 trillion had been promised by the Sjamsul
Nursalim family's Gajah Tunggal Group, the former owner of the
suspended Bank Dagang Nasional Indonesia, to repay their debts to
the central bank.

"In this binding agreement, the shares in the companies of the
two groups (pledged as assets) will be transferred to IBRA,
including cash and property," IBRA said.

However, the agency added that all the pledged assets would
first be assessed by the Financial Sector Action Committee
(FSAC), which includes key economics ministers and the central
bank governor. The committee will judge whether the assets are
enough to cover the banks' obligations.

The agreement with two of the country's richest business
groups is the first major step toward recovering more than Rp 141
trillion in BI liquidity support given to commercial banks to
help them meet massive demand for withdrawals by panicked
depositors.

A total of 14 banks were given until midnight on Monday to
return the liquidity support and bring their intra-group loans
down to within the legal limit.

Most of the banks breached the 20 percent limit on intra-group
loans and channeled between 70 and 100 percent of their equity
capital to affiliated companies.

IBRA said that Mohamad "Bob" Hasan, a part owner of the
suspended Bank Umum Nasional (BUN), property mogul Usman
Admadjaja, the former controlling shareholder of nationalized
Bank Danamon, and the owners of seven other suspended banks had
failed to meet Monday's deadline.

BUN received Rp 6.8 trillion in liquidity support from the
central bank, while Bank Danamon received Rp 25.8 trillion. It
wasn't clear how much the two banks' owners had to recover to
meet the legal limit on intra-group loans.

IBRA said that the FSAC would meet next week to determine the
fate of the former owners of these banks, and said they could
face criminal proceedings.

Bob Hasan is the long-time golfing partner of Indonesia's
former president Soeharto.

Deputy Attorney General Soehandjono said on Monday that the
former owners of nationalized banks and closed banks had offered
assets they claimed to be worth Rp 177 trillion (US$16 billion)
to repay Bank Indonesia liquidity support and to return the money
channeled by their banks into their own business groups.

The tycoons who must pay back their obligations to the
government include several of the country's richest businessmen
who amassed wealth from lucrative business deals during
Soeharto's 32-year rule.

The Salim family, one of the richest families in Asia,
controls diverse business operations including the publicly-
listed instant noodle manufacturer PT Indofood Sukses Makmur,
cement manufacturer PT Indocement Tunggal Prakarsa and car
manufacturer PT Indomobil Sukses International.

IBRA did not reveal which assets the Salim family had promised
the government, but sources close to the negotiations said the
family would have to release their controlling share in the above
companies and some of their overseas operations.

The agency said the assets transferred by BCA and BDNI's
owners would not become state-owned companies but would remain
under IBRA control and eventually be sold off.

IBRA will create separate holding companies for the Salim
Group and Gajah Tunggal assets. Both groups will be given
minority stakes in the holding companies and continue to run
their businesses "under the supervision of IBRA".

IBRA will dispose of the assets in the holding companies as
soon as practical, either through sale to strategic or financial
investors or to the public through the stock market.

It added that the sale would be timed to maximize revenue to
the government.

"It is crucial that IBRA preserves the value of the assets
that have been transferred to us. We must motivate the management
of the relevant companies so that they continue to function
effectively in the real sector of the economy and help to bring
about an economic recovery," IBRA chairman Glenn S. Yusuf said in
a statement. (rei)