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)