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Indonesian tycoons press for easier debt solution

Source
Straits Times - November 28, 2000

Robert Go, Jakarta – Potential investors seeking bargains from the restructuring agency, Ibra, might have to keep their wallets buttoned up, if two of the country's biggest tycoon-debtors succeed in pushing the government to revise debt-repayment deals signed two years ago.

Tycoons Anthony Salim and Sjamsul Nursalim, whose combined debts to the state amount to over 81 trillion rupiah (S$16 billion), filed protests with the government last week demanding debt workouts similar to the one given to Texmaco Group, another heavily indebted conglomerate, earlier in October.

Both the Salim Group and Mr Sjamsul's Gajah Tunggal Group have surrendered assets to Ibra under an earlier model – MSAA. Two weeks ago, the two men also forwarded promissory notes for additional assets and personal guarantees to the government to cover any future shortfall.

But following the Texmaco deal, lawyers for Mr Salim and Mr Sjamsul charged that Texmaco founder Marimutu Sinivasan capitalised on connections with President Abdurrahman Wahid and Chief Economics Minister Rizal Ramli, a former consultant to Texmaco, to secure preferential treatment.

Indeed, Mr Abdurrahman has given Mr Marimutu a temporary immunity from legal prosecution. Now Mr Salim and Mr Sjamsul want a Texmaco-type deal where instead of surrendering their assets to the government, they would simply use assets as collaterals for their debts.

Such a revision, argued Jakarta's analysts and economists, would hamper Ibra's asset disposal programme, as it would need to secure the former owners' agreements before selling, and endanger its ability to fulfil state budget targets of 22 trillion rupiah this year and 27 trillion rupiah in 2001.

Director of Ibra's Asset Management Investment unit Mr Dasa Sutantio yesterday said the agency strikes deals with each conglomerate based on individual evaluations, and not based on any strict model.

"There is no such thing as a Texmaco structure. Annexes to existing deals with Salim and Sjamsul would take into account how the government's financial recovery efforts can be met," he said.

Mr Dasa also rejected the suggestion that Ibra is speeding up disposal of former Salim Group assets, with sales of key assets totalling over three trillion rupiah in the last week alone, on concerns that Mr Salim might get his way and block future asset disposal plans.

But a high-level Ibra source told The Straits Times that the tycoons are seeking more advantageous debt-workout deals at the expense of state interests. "They want more time to pay, they want to stop Ibra from selling assets." The government is strapped for cash and their tactic is to drag the process, to hold us hostage.'

The source further said that following the Texmaco template, conglomerate owners retain more control over their assets and exercise first-refusal option when the companies are put on the auction block. "For Salim, who has been trying to quietly buy back his companies while he owes trillions of rupiah and at the risk of angering the public, a Texmaco-style revision would kill many birds with one stone," the source said.

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