Tommy must pay Timor debts: IBRA

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) insisted on Friday "Tommy" Hutomo Mandala Putra, the former owner of automaker PT Timor Putra Nasional, repay his debt to the agency before pulling out of the company.

"If Tommy pulls out and his debt is just considered settled, it will be a loss to us. But if he pays first, it's a different thing," IBRA official Hendro Santoso said.

Hendro was responding to earlier reports quoting Minister of Trade and Industry Luhut. B. Panjaitan as saying the government and the South Korean Kia Motors Corp. had agreed to form a joint venture to resume the stalled Timor national car project.

Luhut said that under the plan, Tommy, the youngest son of former president Soeharto, would have to leave Timor.

He also indicated the government would settle Timor's debts under a debt to equity swap.

Luhut disclosed the plan on Thursday after accompanying a South Korean business delegation to a meeting with President Abdurrahman Wahid.

The Soeharto administration appointed Timor in 1996 to develop the national car, providing the company with special privileges, including tax breaks.

But the car project was halted when the country was at the height of the economic crisis in 1998 and amid pressure from the World Trade Organization.

Timor owed several state banks some Rp 3 trillion (US$380 million) in debts, which have since been taken over by IBRA. Timor is also controlled by the agency.

Hendro said if Tommy completely paid his company's debts, he would be allowed to remain at Timor.

Asked if this would discourage Kia from again becoming involved in the national car project, Hendro said: "It's really up to Kia."

He added that Tommy had expressed interest in maintaining ownership of Timor.

Hendro declined to provide further details about the government and Kia's plans with Timor, saying everything was still being studied.

He added that IBRA would welcome other investors interested in Timor, stressing that the agency's position in Timor was not that of a strategic investor, but a creditor.

The banks which issued loans to Timor were forced to transfer Timor's credit portfolio to IBRA when the loans were not repaid.

IBRA's mission is to restructure nonperforming loans of closed banks, nationalized banks and recapitalized banks. (rei)