Timah to recoup quarter of troubled investment

Rendi A. Witular, The Jakarta Post, Jakarta

State-owned tin mining company PT Timah said it would only be able to retrieve around one-fourth of its huge investment in PT Bahana Pembinaan Usaha Indonesia, a troubled state-owned investment company.

Timah president Thobrani Alwi said that this would limit the company's ability to finance this year's exploration activities, which are expected to cost a total of US$20 million.

He was speaking to lawmakers during a hearing session on Monday with the House of Representatives Commission VIII on mining and energy.

Timah, in late 1997, made a short-term investment worth $22 million and Rp 61 billion (about $6.85 million) in Bahana because depositing money in banks at the time was deemed unsafe amid the severe financial crisis.

But after three months, Bahana could only pay back $5 million, and defaulted on the remainder.

After lengthy negotiations, Thobrani said that Timah would likely recover only 20 percent to 25 percent of the investment as Bahana was also obliged to repay huge debts to other creditors.

He added that filing a bankruptcy suit against Bahana would not benefit Timah because it would have to wait in a long line of creditor companies with higher priority than Timah before the debt could be paid off.

He said that Timah was still in negotiations with the Indonesian Bank Restructuring Agency (IBRA) to recoup the money put in Bahana.

Bahana is now under the control of IBRA.

Elsewhere, Thobrani said that Timah had appointed an independent consultant to evaluate six poor performing subsidiaries. A result is expected later this year.