SMG told to repay debts to IBRA
SMG told to repay debts to IBRA
The Jakarta Post, Jakarta
Troubled Sinar Mas Group (SMG) must repay US$240 million of
its total $1.2 billion debt to the Indonesian Bank Restructuring
Agency (IBRA) by the end of this month.
IBRA Chairman Syafruddin Temenggung was quoted by Antara as
saying on Tuesday that failure to make the repayment would force
the agency to seize the group's collateral assets, a move that
would certainly anger Sinar Mas' foreign creditors and
bondholders.
He added that the policy was in line with the decision made by
the Financial Sector Policy Committee (FSPC) on May 8.
Sinar Mas had earlier asked the government for a rescheduling
facility.
The government decided last year to guarantee Sinar Mas' debts
in the ailing Bank Internasional Indonesia (BII) to spare the
bank from deeper trouble due to a possible default by the group,
which also owes billions of dollars to international creditors
and bondholders.
In return, Sinar Mas agreed to surrender assets equal to 145
percent of its debts to BII as collateral until the group repay
the debts.
Previous reports stated that the group had pledged various
fixed and equity assets. Among the assets pledged were factories
and equipment under PT Indah Kiat Pulp & Paper, PT Tjiwi Kimia,
PT Pindo Deli Pulp & Paper Mills, PT Lontar Papyrus Pulp & Paper
Industry, PT Purinusa Eka Persada.
It has also been reported that Sinar Mas offered shares in
publicly listed Indah Kiat, Tjiwi Kimia, PT Duta Pertiwi PT Smart
Corporation, in non-listed PT Indomilk, Pindo Deli Pulp, PT Bumi
Serpong Damai, PT Henkel Indonesia.
Around 90 percent of Sinar Mas' debts to BII belong to the
group's Singapore-based Asia Pulp & Paper Co., which has
defaulted on more than $12 billion of foreign debts.
Sinar Mas, the country's second largest conglomerate after the
Salim Group prior to the 1997 financial crisis, borrowed
massively from BII at the time to help finance its aggressive
expansion program.
BII was founded by Sinar Mas, but the bank is now under
government control.