JAKARTA: Indonesia’s mining-to-telecoms conglomerate Bakrie Group will negotiate with creditors to restructure part of its US$8 billion (RM26.3 billion) debt rather than sell major assets, said people familiar with its strategy.
They said the group, which has gone through two financial crises since the 1990s, would opt for the tested approach of restructuring debt, even though that risks frustrating increasingly impatient creditors.
Bakrie companies have missed principal or interest payments at least four times in the past two years, and creditors would prefer them to sell assets to raise funds faster.
Some creditors sued one Bakrie company in New York while a Jakarta supplier has asked an Indonesian court to supervise a debt restructuring. Other creditors of another Bakrie firm have refused a proposal to convert its debt into shares.
Companies from Japan, Malaysia and Indonesia had expressed interest in palm and rubber assets owned by PT Bakrie Sumatera Plantations Tbk but the group wanted to keep them, said a source familiar with the Bakrie Group strategy.
Another person close to the group said with debt levels as high as they are, “in a way you have to come up with a plan to restructure even if it’s a long-term game”.
Judgments in foreign courts are not enforceable in Indonesia, so foreign creditors would do better to leave Bakrie to work out its debt problems rather than try to enforce claims against it, the second person said.
The Bakrie Group has long carried a heavy debt load and creditors have been tolerant, in part because of generous yields and a belief that the companies
could tap rich mining resources to come up with cash. Reuters