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)