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Raja Garuda Mas Group, the parent company of Riau Complex --
a massive integrated paper manufacturing plant in Riau -- is
renegotiating the repayment terms for its staggering debt of US$1.4
billion with its creditors.
"We're close to reaching an agreement but there are still several items
that need to be discussed," a group executive, Tjandra Putra, said as
quoted by the www.tempointeraktif.com news portal.
Tjandra said that as part of the negotiations, the group was willing to
increase the size of its yearly installment payments, but he refrained
from giving any figures.
"However, we hope that the size of the installments will not be
increased," he said.
The pulp and paper company, owned by tycoon Sukanto Tanoto, owes the
money to a syndicate of banks, including Bank Mandiri and Bank Negara
Indonesia (BNI).
The loan, which will mature in 2010, was mainly disbursed to seven of
the group's subsidiaries: Rp 3.4 trillion to PT Riau Andalan Pulp &
Paper, Rp 620.8 billion to PT Riau Andalan Kertas, and Rp 1.4 trillion
to PT Riau Prima Energi, with the remaining Rp 7.2 being divided among
four other subsidiaries.
At the moment, the group pays out $61 million in annual installments to
the banks, covering both principal and interest payments.
Tjandra said that the group had almost reached an agreement last week
with Bank Mandiri and BNI. "But, apparently, Mandiri disagreed on
several points."
Tjandra said that Mandiri was looking for US$120 million for the main
installments alone, excluding interest.
He said that he hoped a deal would be reached soon, but he could not
say exactly when this was likely to happen.
BNI corporate secretary Intan Abdams Katoppo said negotiations were
still underway and acknowledged that there were indications that the
group was willing to increase its the size of its installments to above
$110 million per year.
"For BNI, $110 to $120 million in installments would be reasonable,"
she said.
However, she stressed that any deal on the size of the installments
would first have to be agreed to by Mandiri as the lead creditor in the
syndicate.
Mandiri corporate secretary Mansyur S. Nasution said that the
negotiating process was intensifying. Even though he knew nothing about
the likely size of the installments, he confirmed that a deal could be
reached by the end of the month.
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