Tommy must pay Timor debts: IBRA

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)