Texmaco firms seek loans from foreign banks

Texmaco firms seek loans from foreign banks

The Jakarta Post, Jakarta

Publicly listed textile firm PT Polysindo Eka Perkasa, a unit
of troubled textile conglomerate Texmaco Group, said it was
currently in talks with two foreign-based banks to acquire loans
to revive its ailing operation.

Polysindo president Ravi Shangkar said the banks were likely
to agree to channel between US$10 million and $12 million in
working capital to the company in October or November, pending
the completion of a restructuring scheme formulated by state
asset management company PT Perusahaan Pengelola Aset (PPA).

"We expect the capital injection will be able to help boost
our utilization capacity," said Shangkar in a public presentation
to reporters, analysts and investors on Friday.

Shangkar said Polysindo would need between $50 million and $60
million in working capital to allow the company to run at full
production capacity.

At present, the company can only utilize 60 percent of the
installed capacity at its polyester chip and polyester yarn
production facilities.

Utilization of installed capacity at its purified terephthalic
acid, polymer and polyester yarn plants currently stands at
between 80 percent and 90 percent.

Shangkar said due to the unavailability of funds, Polysindo
had recorded losses amounting to Rp 1.14 trillion (US$127
million) last year and Rp 2.31 trillion in the first semester of
this year.

The company also recorded a capital deficiency of Rp 11.1
trillion, with a total liability of Rp 18 trillion.

Aside from Polysindo, publicly listed PT Texmaco Jaya,
Texmaco's other ailing textile unit, also requires between $10
million and $12.5 million funds for working capital.

Shangkar said due to the lack of working capital, Texmaco Jaya
had decided to lay off 60 percent, or 3,500, of its workers. The
company has a capital deficiency of Rp 1.21 trillion.

The Jakarta Stock Exchange (JSX) has threatened to delist the
two companies following uncertainties over their future
operations amid stalled negotiations between their holding
company and the government and foreign creditors to restructure
the group's debts.

The group owes around Rp 29 trillion (US$3.4 billion) to the
government, which has been trying to sell these loan assets for
the past few years.

It also owes $1.2 billion to foreign creditors, in addition to
$52 million in tax, electricity and gas arrears.

With more than 20 subsidiaries, the Texmaco group, which was
founded by an Indonesian businessman of Indian origin, Marimutu
Sinivasan, plunged into debt following the Asian financial crisis
of 1997, prompting the government to bail it out.

The Texmaco loan assets are among the few remaining unsold
assets once vested in the now-defunct Indonesian Bank
Restructuring Agency (IBRA), and are currently managed by PPA.