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.