The Capital Market Supervisory Agency (Bapepam) has notified IBRA that the agency cannot exercise its voting right at Astra's extraordinary general meeting of shareholders, which is scheduled for Feb. 8, to nullify decisions made by a shareholders meeting last March to make a rights issue and sell non-core assets.

"IBRA cannot vote on these two items on the agenda on the grounds that it is a conflict of interest," an informed source at Bapepam confirmed on Thursday.

Other sources close to the deal said this restriction might impinge on the deal between IBRA and Newbridge/Gilbert because the closing of their transaction was partly contingent on the agency's success in deferring Astra's rights issue and sales of non-core assets.

IBRA, under tremendous pressure to raise Rp 17 trillion (US$2.35 billion) for the state budget by March, has called for the extraordinary shareholders meeting at the request of the American investor group led by Newbridge Capital and Gilbert Global Equity Partners.

IBRA last month chose the American investor consortium as the preferred bidder for its 40 percent stake in Astra without a competitive bid, a move which irked the Astra management and flabbergasted securities analysts.

The transaction, if successfully closed, would earn around $500 million for IBRA.

The agency previously proposed that the forthcoming meeting annul the decisions adopted by the Astra shareholders meeting last March regarding the launch of a rights issue and sales of non-core assets to raise fresh funds for strengthening its capital and reducing its debt burden.

Astra adopted these two measures last year as part of its deal with foreign creditors to restructure about $1 billion in debts.

But IBRA chief Cacuk Sudarijanto proposed last week another (third) item for the agenda -- a replacement of the current Astra management -- also at the request of Newbridge/Gilbert, which alleged that the management obstructed a due diligence it intended to conduct as part of its deal with IBRA.

The management flatly rejected this allegation, arguing that as a publicly listed company, Astra acted only to comply with securities regulations.

However, this spat made negotiations between IBRA and the Astra management increasingly acrimonious, especially after the IBRA- Newbridge/Gilbert preliminary agreement on the transaction, supposed to be strictly confidential, somehow found its way to the print media.

IBRA received another blow after Coordinating Minister for Economy, Finance and Industry Kwik Kian Gie said on Wednesday evening that Newbridge/Gilbert should pay the highest bid price for Astra shares.

Kwik's remarks contradicted the IBRA-Newbridge/Gilbert deal, whereby the investor consortium, as the preferred bidder, would only have to match, not to exceed, the price offered by other bidders to close the transaction.

He said IBRA should give other bidders a fair chance to buy Astra shares. Kwik said that IBRA should honor its contract with Newbridge/Gilbert but he insisted that the transaction should be done in a transparent and fair manner.

The IBRA-Newbridge/Gilbert deal became a controversy as many analysts consider its terms too much in favor of the American investor group, including those regarding the share price, payment and breakup fee and other privileges.

Some analysts lambasted IBRA for its complete disregard of Astra's interests and disrespect of Astra management, which they said had performed well in reinvigorating the company to net a respectable profit last year, compared to a huge loss in 1998.

Several other analysts, however, contended that the leaking of the IBRA- Newbridge/Gilbert agreement damaged IBRA's credibility in making future deals with other investors.

Most analysts agree that the IBRA-Newbridge/Gilbert deal is a test case in the effort to woo back foreign investors to the crisis-hit country, but they wonder why the agency acted so unprofessional in dealing with investors.

IBRA's bid to sell its stake in Bank Bali to British-based Standard Chartered Bank last year was also in tatters due to a political scandal and failure to gain cooperation from the Bank Bali staff.

Analysts were perplexed by IBRA's apparent ignorance of the imperative to make its Astra deal transparent in compliance with securities market regulations.

Analysts have expressed great concern that a stymied deal for the Astra shares would damage IBRA's credibility and consequently affect its ability to raise Rp 16.2 trillion from asset sales between April and December for the 2000 state budget.

The questionable manners in which IBRA arranged the deal also unnecessarily brought Newbridge/Gilbert, a highly reputed international equity funds, into the controversy and to angry outbursts from the Astra management.

Some analysts said if IBRA could not garner enough votes to oust the incumbent Astra management at the forthcoming shareholders meeting, Newbridge/Gilbert might withdraw from the deal.

Index

Hidayat said on Thursday that the advanced fee was burdensome for the government.

"The World Bank requires that one percent (of the loan) is paid up front. It is a new scheme," he told reporters on the sidelines of a consultation gathering between the government and some 20 non-governmental organizations (NGOs) ahead of the Feb. 1 to Feb. 2 Consultative Group on Indonesia (CGI) meeting here.

CGI is a grouping of Indonesia's major donors led by the World Bank.

"This (advanced fee) is burdensome ... we have proposed this to be revised, but the World Bank will make a decision at its board of directors meeting in Washington," Hidayat said.

He said the advanced fee was on top of the usual commitment fee, which ranges between 0.25 and 0.75 percent, and interest rate.

He said that the advanced fee was imposed last year, when the World Bank withheld its project loans as it shifted its priority to social safety net programs to help the poor in surviving the economic crisis.

The World Bank, however, did not impose an advanced fee for its program loans, Hidayat said.

Program loans are those used to finance the government's programs, including the social safety net, while project loans are used to finance infrastructure development and basic education.

Hidayat added that other international lenders, like the Asian Development Bank, did not impose such fees on their programs or project loans.

He said this issue would not likely be discussed at the CGI meeting because it was an internal matter of the World Bank.

"But if the government raises the issue of interest rates and commitment fees with the loans, the problem with the advanced fee could also be discussed at the CGI meeting," Hidayat said.

Meanwhile, the International NGO Forum on Indonesian Development (INFID) called on the country's major donors grouped in the CGI to provide support for the three-month-old administration of President Abdurrahman Wahid in solving the country's economic and social problems.

The group of NGOs said Abdurrahman's government was elected through the country's first democratic election process in more than 40 years.

"This is the first time we have ever asked the donors to support the (Indonesian) government," INFID executive secretary Binny Buchori told a media conference following a meeting with the government and World Bank officials.

She said INFID had voiced strong criticism toward the previous authoritarian regime of Soeharto.

She said the meeting was unprecedented as the previous government never consulted the NGOs prior to signing a new loan with the country's donors.

She explained that NGOs continued to put pressure on the government to seek a 30 percent debt relief, which was somewhat equal to the amount of foreign loans corrupted by the previous regime during its 32 years in power.

"But the government insists that it's impossible to ask for debt relief. The government, instead, promises to seek debt rescheduling," Binny said.

Indonesia is seeking to reschedule some US$2.1 billion of its sovereign debts this year.

The government has also said it expects to get $4.1 billion in new loans from its donors in CGI in the April-December budget year.

Binny said the NGOs called on the foreign donors to push the government of President Abdurrahman to lessen the social political role of the powerful military and to fight human rights violations in the country.

"The CGI must support the government on this matter," she said. (rei)

In a statement sent to the court on Thursday, Tirtamas Comexindo president Hashim Djojohadikusumo said his company would likely be able to repay its debts if given ample time to negotiate with its creditors.

The Indonesian Bank Restructuring Agency (IBRA) -- representing the now defunct Bank Tamara -- filed a bankruptcy suit against Tirtamas Comexindo in late December for its failure to repay Rp 38 billion in matured loans to the closed bank.

Tirtamas Comexindo also has outstanding debts totaling Rp 1.5 trillion with a number of other local and foreign banks.

The company, which initially labeled IBRA's bankruptcy suit as abrupt and unexpected, has petitioned the court for a suspension of payment, or a PKPU.

According to the 1998 Law on Bankruptcy, a company facing a bankruptcy suit can temporarily stop the suit by filing a PKPU request with the court. If the request is approved, the company is given a maximum of 270 days to negotiate a debt restructuring deal with all of its creditors.

However, the reprieve can be ended at any time by a majority vote of the creditors if the borrower fails to show it has the ability and good faith to settle its debts, said insolvency lawyer Andrey Sitanggang from RAN law firm.

If the PKPU period ends without a debt restructuring deal in place, the borrower is automatically declared bankrupt. Furthermore, by being declared bankrupt through the PKPU process, the borrower loses its right to appeal to the Supreme Court, Andrey said.

"One way of proving the borrower has good faith is by repaying some portion of the loan principal to the creditors ahead of the debt restructuring negotiations," Andrey told The Jakarta Post.

Bank Tamara and other local private banks closed by the government have been placed under IBRA's supervision as part of the country's bank restructuring program.

A number of these other local banks under IBRA also have loan exposure to Tirtamas Comexindo, a business unit of the Tirtamas Group owned by the Djojohadikusumo family.

IBRA officials have expressed pessimism in recovering assets from this company because the agency mostly only get personal guarantees from Hashim. One guarantee is nine million shares of PT Semen Cibinong.

In a separate case, the Jakarta Commercial Court earlier this week dismissed IBRA's bankruptcy suit against PT West Kalindo Pulp Papermill, owned by prominent businessmen Thee Ning Khong and Hasan Basuki.

IBRA was representing state Bank Rakyat Indonesia (BRI) in the suit.

The court dismissed IBRA's bankruptcy suit on the grounds that the agency had not proved the borrower had at least two creditors. Also, the court ruled that West Kalindo proved it had reached a debt restructuring agreement with BRI.

"There is no matured debt if a debt restructuring agreement has been reached between the two parties," the court verdict said.

The 1998 Law on Bankruptcy stipulates that for a party to be declared bankrupt, the plaintiff must prove that the claimed party has one matured debt and at least two creditors.

IBRA filed the bankruptcy suits against Tirtamas Comexindo and West Kalindo late December, arguing that they were uncooperative in settling their debt to the agency. (udi)