Seven local firms renegotiate with foreign creditors

Seven local firms renegotiate with foreign creditors

JAKARTA (JP): Seven debt-ridden local companies are currently
negotiating with their foreign creditors to restructure their
loans amounting to a combined total of US$11 billion, according
to Yusuf Anwar, task force chairman of the Jakarta Initiative
debt relief program.

Yusuf, also the chairman of the Capital Market Supervisory
Agency (Bapepam), did not name the companies, but said they were
a mixture of large, medium and small scale firms engaged in
property, construction, agriculture, hotel and export-oriented
business.

"There has been positive progress in the negotiations," Jusuf
said in a breaking of the fast ceremony on Monday.

One of the seven firms has secured a standstill agreement with
creditors for its $400 million and Rp 300 billion worth of loans,
he said.

Jusuf said the Jakarta Initiative program was also used by one
small Indonesian company with a meager Rp 14 million in overseas
debt.

"I do not remember the name of the firm but we are pledged to
help small companies too," he said.

He said that the country's debt-ridden companies, which were
previously reluctant to join the program, were now keen to
renegotiate their overseas debts.

He said as many as 74 companies had so far joined the program.

The task force, established in September last year, is meant
to help companies in trouble restructure not only their debts but
also their operations.

Indonesia's private sector is burdened with $64 billion in
overseas debt, which pushed many Indonesian firms to the brink of
collapse when the rupiah depreciated by more than 50 percent
against the U.S. dollar.

Hovers

The rupiah, which plunged to its lowest level of 17,000
against the American dollar in January last year, now hovers
around 8,000 to the dollar, still much lower than its pre-crisis
level of 2,450 in July 1997.

Jusuf said he was optimistic that more indebted Indonesian
firms would be willing to join the initiative program, because,
he said, of the positive development in the country's economy,
especially the strengthening of the rupiah against the dollar.

"A strong rupiah improves the environment for debt
restructuring, because offshore creditors are increasingly
confident about the recovery of the country's economy," he said.

Jusuf said that the Jakarta Initiative program had provided
more incentives and eliminated regulatory obstacles for corporate
restructuring, which had so far included mergers, asset swaps and
debt-for-equity conversions.

"This shows the private sector has given a positive response
to the government's efforts," he said.

Corporate reorganization is seen by creditors as a fundamental
condition in debt restructuring agreements, as seeking debt
repayment through the court system does not yield any positive
results, analysts said.

Foreign creditors, which have been impatient with the progress
of the country's indebted firms, have lodged insolvency petitions
with the newly established commercial court.

But most of them were disappointed, with many claims turned
down by the court. (aly)