03 February 2003 00:00 [Source: ACN]The Indonesian Bank Restructuring Agency (Ibra) plans to approach potential investors to purchase its assets in petrochemical companies starting this month, an Ibra official told ACN last week.
Ibra plans to sell the assets in two batches. The first batch includes the assets it owns in Chandra Asri and the Texmaco Group, and the second batch the assets it holds in the Tirtamas Group.
The agency plans to start selling the first batch this month and complete the job by June 2003. Sale of the second batch would begin in May and end by September this year.
Ibra is required to dispose of the unsold assets because it will be dissolved by December 2003.
The official said some of the investors whom Ibra plans to approach - BP Chemicals and Reliance Industries among them - had previously showed an interest in buying the agency's 25.86% stake in Chandra Asri and a US$100m loan that the company has to pay back to Ibra.
There have, however, been several developments since last year with regard to BP's business strategy in Asia which may indicate that the petrochemical major may no longer be interested in Chandra Asri.
In November last year, BP announced that it was selling its 75% stake in PE producer Peni. Sumitomo Corp and Mitsui & Co, which each have a 12.5% stake in the company, are also selling their shares.
BP has, on several occasions, expressed an interest either to form an alliance or to merge with Chandra Asri (ACN 20-26 Jan, p10). But the idea did not materialise.
A further indication of BP's disillusionment with Southeast Asia came when BP also announced last year that it was pulling out of Bataan PE Corp. BP holds a 38.5% stake in the Philippine PE joint-venture company, as does Petronas. Sumitomo Corp owns 5% and Bataan PE Holdings the remaining 18%.
Reliance was not available for comment.
It has also emerged that Chandra Asri's former head, Prajogo Pangetsu, has pledged all his required assets to Ibra. Prajogo owns 49.55% of Chandra Asri through his company, Inter Petrindo Inti Citra (Ipic). But this stake has been pledged to Ibra as collateral for the Rp5432.3bn (US$612.7m) in convertible bonds that Ipic issued, the official said.
The investor who buys the US$100m loan and the convertible bonds will indirectly inherit the 49.55% stake and Chandra Asri's fixed assets as collateral for the loan, he said. This collateral has to be shared equally with other creditors, he added.
Ibra plans to sell its assets in the Texmaco Group and the Tirtamas Group possibly to a consortium of investors because of the large size of the assets.
The agency would sell some Rp26 000bn worth of bonds issued by a holding company that it set up to handle the assets pledged by the Texmaco Group as part of its debt-restructuring plan.
As for the Tirtamas Group, Ibra plans to sell its 59.5% stake in Trans-Pacific Petrochemical Indotama's (TPPI) stalled aromatics project. The Tirtamas Group had once held a 70% stake in the TPPI project, but this was altered after the company's debt was restructured. The remaining 40.5% stake is owned by foreign petrochemical companies, including Nissho Iwai, Itochu, and Siam Cement.
The TPPI stake and the companies that were once owned by the Tirtamas Group - PP producer Polytama Propindo, oxo-alcohols producer Petro-Oxo Nusantara and polyester staple fibre manufacturer Pacific Fibertama Corp - would all be sold as a package to a consortium of investors.
Ibra put the disposal of its assets in the Tirtamas Group in the second batch of sales because it is waiting to finalise an agreement on a US$400m loan package in March, the official said. The loan would facilitate the restart of the TPPI aromatics project in Tuban, Indonesia.
He said intensive negotiations are going on between Ibra, Pertamina and a consortium made up of Mitsui & Co, Sumitomo and Mitsui Banking Co-operation, the Japanese Bank of International Co-operation and Nippon Export Insurance to see if an in-principle agreement on a loan package can be reached.
As part of the loan package, Mitsui would offtake low-sulphur wax residue from Pertamina's refineries in Indonesia. An agreement on this would have to be finalised before the loan agreement can be finalised.
The official was unable to say if another consortium comprising BP and ANZ bank of Australia is still in discussions to provide the loan.
Should Ibra be unable to sell its assets in the companies, it would pursue one of two options.
The first option would be to transfer the unsold assets to the Ministry of State-owned Enterprises which, together with the Ministry of Finance, would then have another go at selling the assets.
The second option would be to set up several holding companies to handle the disposal of the different types of unsold assets. These holding companies would then be run by an asset-management company that would be either 100% state-owned or a joint venture between the government and a foreign or domestic investor. Setting up of the asset-management company would require approval from parliament, he said.
There is doubt that Ibra would be able to sell the assets within this year because it had taken the agency years to draw up debt-restructuring plans for the companies.
The official, however, said Ibra is confident of doing so.
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