Singapore – The chief of the Indonesian Bank Restructuring Agency (IBRA) said Tuesday top Indonesian ministers have given "verbal" approval to issue bonds to bail out 48 companies indebted to IBRA.
"About the 48 enterprises under IBRA, we got verbal or basic approval from Finance Minister Bambang Sudibyo and Coordinating Minister for Economy, Finance and Industry Kwik Kian Gie [for] state enterprise recapitalization," IBRA chairman Cacuk Sudarijanto said at a news briefing here.
He was here to attend a forum of the Singapore Chinese Chamber of Commerce and Industry. The 48 companies owed IBRA some Rp 15 trillion (US$2 billion), he said.
To speed up debt restructuring, the government will issue bonds through state enterprises, with the companies using the proceeds to repay their debts to the banks, he said.
The restructuring of 48 state companies together with around 160,000 small and medium companies must be completed in the next two quarters. Once the restructuring is completed, he said IBRA will end up handling about 1,000 large debtors.
The IBRA chief also defended a decision to replace a key official, saying the move was aimed at speeding up Indonesia's asset disposal program.
This week, IBRA had to complete its bank recapitalization plans, and ensure the successful initial public offering next month of one of the Indonesian banks, PT Bank Central Asia, he said.
IBRA has announced plans to sell within the year equity in at least 20 companies, and a good portion of 1,105 properties or bank offices, in a bid to raise $5.1 billion by December for the Indonesian budget. However, he said it will only sell 10 to 15 percent of Bank Central Asia instead of its initial target of more than 30 percent if the price is not high enough, Cacuk said. He added IBRA will hold an international roadshow visiting Singapore, London, New York and four other cities in April.
Cacuk earlier said in a bid to ease its hefty workload, IBRA plans to farm out the job of restructuring loans valued at between Rp 5 billion (about $667,000) and Rp 50 billion to private banks, freeing up IBRA officials to concentrate on restructuring larger loans. Agency officials say the IBRA will seek to outsource some restructuring work to several banks and pay them a fee for managing the loans as well as a percentage of loans restructured.
Cacuk said IBRA would seek to sell stakes in companies in the agribusiness, consumer goods, trading and property sectors. IBRA plans to sell the stakes through a mixture of initial public offerings and private placements. IBRA has previously said that around nine of the 20 companies will be from the Salim Group.
IBRA's efforts to sell assets got a boost last week when it sold 39.5 percent of its stake in auto maker PT Astra International to a consortium led by Singapore's Cycle & Carriage Ltd. The sale is expected to spark other sales to foreign investors.
In addition, Cacuk said IBRA's short-term priorities include selling off stakes in state-owned companies and initiating government-wide restructuring of state companies.