Sinivasan ready to release large stake in Texmaco

JAKARTA (JP): The majority shareholder of the giant Texmaco Group, Marimutu Sinivasan, said on Wednesday that he was ready to release his controlling stake in four of its publicly listed subsidiaries to help restructure their total debts of US$2.291 billion.

Sinivasan said that the transfer of his majority ownership in the four subsidiaries was one of several debt settlement alternatives proposed to creditors.

He said that negotiations on the debt restructuring proposals were underway and he hoped that agreement could be achieved by September of this year.

The four companies are engineering company PT Texmaco Perkasa Engineering, automotive manufacturer PT Wahana Jaya Perkasa, and textile companies PT Polysindo Eka Perkasa and PT Texmaco Jaya.

"Many owners of foreign companies now hold minority stakes, it's very common, and I think we should follow this course," he told reporters at a public presentation in the Jakarta Stock Exchange.

The public expose followed the disclaimer opinion by public accountants on all four subsidiaries' financial performances.

However, Sinivasan added that a debt to equity swap was only one of many options during negotiations with creditors.

"A haircut is quite possible and maybe we'll find a strategic investor," he explained.

He claimed that an oil and gas company from Saudi Arabia had already expressed interest in investing in Wahana and was waiting for the outcome of the company's debt restructuring talks.

The business group was at a center of a loan scandal in late 1999 involving $754 million and Rp 1.9 trillion ($220 million) in preshipment export facilities.

Texmaco obtained the loan facilities between November 1997 and February 1998 from Bank Indonesia through state owned Bank Negara Indonesia (BNI) and Bank Rakyat Indonesia (BRI), thanks to alleged intervention by the then president Soeharto.

Sinivasan was named a suspect but the Attorney General's Office later halted the case because of a lack of evidence.

IBRA has appointed Deloitte & Touche Tohmatsu, Jakarta, to conduct due diligence on the four companies as part of the debt restructuring program.

Some $868.8 million of the four companies' $2.2 billion debts is owed to the Indonesian Bank Restructuring Agency (IBRA), which took over the loans from local banks.

Texmaco's largest indebted subsidiary is Polysindo, with debts amounting to $1.52 billion, of which $684 million are in the form of secured Yankee Bonds and $456 million in unsecured commercial paper.

Texmaco Perkasa ranks second with debts totaling $496 million, of which $355 million is being restructured by IBRA.

Sinivasan declined to further elaborate on the debt restructuring process, saying that it would affect current negotiations.

But he expressed confidence that he could pay off his debts given the value of his companies' assets .

He claimed that the assets of Polysindo and Texmaco Jaya alone were worth over $1.8 billion according to foreign appraisals.

Texmaco further asserted that business prospects for its four subsidiaries were promising due to forecasted improvements in their respective markets. (bkm)