Two foreign investors eye Chandra Asri: Govt

Two foreign investors eye Chandra Asri: Govt
by Berni K Mustafa

JAKARTA (JP): Two foreign investors have expressed interest in
acquiring government stakes in the financially ailing PT Chandra
Asri Petrochemical Center, which could end the petrochemical
giant's long and complicated debt restructuring effort.

Secretary of the Financial Sector Policy Committee (FSPC),
Syafruddin A. Temenggung, said on Thursday that the government
was considering selling its stake as part of the restructuring of
Chandra Asri's huge debts.

"So far, we've received two bids, one from an investment bank
and another from a strategic partner," Syaifruddin said.

He said the government was still seeking the best possible way
to restructure Chandra Asri's debts.

The company owes some US$730 million to a consortium led by
Japan's Marubeni Corp., and another $464 million to the
Indonesian Bank Restructuring Agency (IBRA), which took over
loans from troubled local banks in the wake of the 1997 financial
crisis.

More than two years have passed without IBRA and Marubeni
coming to an amiable debt restructuring deal. The two sides are
unable to agree on how much of their loans should be converted
into equity in Chandra Asri.

The last deal approved by the previous economic team was
slashed over findings that the debt to equity ratio was
advantageous to the Japanese creditors but disadvantageous to the
agency.

Under the deal, IBRA would end up with a 31 percent stake in
Chandra Asri, Marubeni with a 20 percent stake, while the
remaining 49 percent stake would be held by company founder
Prajogo Pangestu.

Critics often argue that the previous deals were the result of
Marubeni's strong lobby of the government.

However, the deadlock at Chandra Asri has prompted the
Japanese government to press Indonesia to speed up the company's
debt restructuring deal.

Chandra Asri warned that further postponements of a deal would
hurt its asset value on top of ballooning interest payments.

The committee, which is in charge of IBRA's high-profile debt
deals, has been handling Chandra Asri's debt restructuring.

Committee secretary Syafruddin declined to confirm an earlier
report by the Dow Jones newswire, which quoted him as saying that
three investors were eying Chandra Asri.

They are U.S.-based investment firm Goldman Sachs, Malaysia's
state-owned oil and gas company Petronas and British-based oil
and gas company BP Plc.

He said the government could expect proceeds of between $800
million and $1 billion from the sale of its stake in Chandra
Asri.

The wire quoted an IBRA source as saying the proceeds could be
used to pay back the Japanese creditors in full, with the
remainder going to the government.

Chandra Asri supplies raw material for the plastic, textile
and chemical industries.(bkm)