Task force restructures US$3.04b in corporate debt
Task force restructures US$3.04b in corporate debt
JAKARTA (JP): The Jakarta Initiative Task Force has completed
restructuring a total of US$3.04 billion in corporate foreign
debt at 24 local companies, including $1.2 billion owed by Bakrie
& Brothers, according to the task force's chief operating officer
Joseph Luhukay.
He said on Friday the Bakrie & Brothers conglomerate was
scheduled to sign a debt restructuring deal with some 300
creditors next week.
Luhukay said the total amount of debt restructured so far was
small compared to the $21.3 billion in debt owed by the more than
200 companies which registered with the task force for assistance
in restructuring their debts.
He said the main problem encountered by the task force in
facilitating the restructuring of the debts, particularly
corporate foreign debts, was the complexity of the debts, which
could involve hundreds of creditors for a single company.
"It may need between one year and one and a half years to
restructure large debts," he said.
Luhukay dismissed concerns the Bank Bali scandal would
further slow the debt restructuring program.
"It's business as usual for us," he said, declining to
elaborate further.
Restructuring corporate debt overhang is seen as a crucial
step toward the country's economic recovery.
Some 2,200 companies in the private sector have a total of
some $67 billion in foreign debt and Rp 300 trillion ($40
billion) in domestic debt.
The task force was established in September 1998 to serve as a
facilitator in encouraging debtors and creditors to reach an out-
of-court debt settlement.
The government hired some 20 foreign debt restructuring
experts in July to help expedite the debt restructuring process.
Luhukay said the foreign experts would begin working next
month.
Most local companies stopped servicing and repaying their
debts after the rupiah plunged to as low as 17,000 against the
U.S. dollar last year. It was at Rp 2,450 before the economic
crisis hit in July 1997.
The rupiah has stabilized to between 6,500 and 8,000 over the
past several months, but this stabilization has seemingly failed
to encourage local companies to seek a debt restructuring deal.
Bank Indonesia deputy governor Miranda Goeltom aired this
concern last week during a seminar.
She said that despite a few successful debt restructuring
deals, a lack of coordination among economic and banking
authorities made the debt restructuring process move very slowly.
"This is causing great concern over the amount of foreign debt
that will fall due in the very near future," Miranda said,
highlighting the serious impact a stronger demand for the dollar
could have on the rupiah's exchange rate.
IBRA
In a related development, Indonesian Bank Restructuring Agency
(IBRA) deputy chairman Eko S. Budianto said on Friday that 26 of
the country's 200 largest debtors, who between them have some Rp
70 trillion in nonperforming loans at domestic banks, had not
signed a letter of commitment (LoC) with IBRA.
A letter of commitment contains an agreement stating that a
debtor will cooperate with IBRA in finding ways to restructure
their debts to local banks.
Under the government's bank recapitalization program,
individual nonperforming loans of over Rp 5 billion must be
transferred to IBRA.
Eko said if the 26 debtors failed to demonstrate their
cooperation by the Aug. 31 deadline, IBRA would take them to
Commercial Court for bankruptcy proceedings, confiscate their
assets and disclose their names to the public.
"If they decline to sign the LoC by the deadline, we will
surely take legal action," he said before launching a public
auction of assets held by IBRA.
The 200 largest debtors mainly comprise companies owned by
politically well-connected businessmen, including the children of
former president Soeharto. (rei/04)