From: 3ZLUFUR@CMUVM.CSV.CMICH.EDU (Elliott Parker)
Newsgroups: bit.listserv.seasia-l
Subject: ID: Share sale unlikely to bail out Summa
Date: 15 Dec 92 13:48:44 GMT
Organization: Central Michigan University
Comments: Gated by NETNEWS@AUVM.AMERICAN.EDU

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To: "Indonesian Students @ Janus" <indonesians@janus.berkeley.EDU>

                  Copyright 1992 Times Business Publications
                                 Business Times

                       December  5, 1992, Weekend Edition

BYLINE: Maggie Ford in  JAKARTA

    EFFORTS by Indonesia's Soeryadjaya family to sell shares in their flagship
listed company PT Astra International are unlikely to generate enough funds to
bail out the troubled Summa Group, according to Finance Minister Dr J B
Sumarlin.

   Dr Sumarlin was speaking following rumours that Prayogo Pangestu, chairman of
the Barito Pacific timber group, was negotiating to purchase a majority stake in
Astra.  The Soeryadjaya family is expected to lose control of the company
soon, as it attempts to raise funds to pay off the debts of the failed Summa
group, which is controlled by Edward Soeryadjaya, son of Astra's founder.

   Bank Summa was suspended from trading by the Indonesian central bank last
month. It has estimated debts of up to US$ 700 million (S$ 1.14 billion). The
bank has since repaid small depositors with up to US$ 5,000 in the bank, out of
a rescue fund put together by a team of commercial banks.

   Dr Sumarlin confirmed that the Soeryadjaya family's stake in Astra was
currently held as collateral for loans given by a group of state banks, which
would have to be repaid first out of the share sale proceeds. The banks include
Bank Ekspor Impor, Bapindo and Bank Dagang Negara. Privately-owned Bank Danamon
is also a member of the group.

   Astra has an outstanding share capital of 242 million shares. It is believed
that a total of 160 million Astra shares were originally held by the group of
banks against loans of US$ 400 million. Of those shares, 40 million have been
sold, 20 million to the Bank Dagang Negara pension fund and 20 million to
foreign nominees. The latter parcel is expected to be bought eventually by
Toyota Motor, Astra's main joint venture partner.

   Dr Sumarlin defended the role of the central bank in the Bank Summa
suspension and warned the Soeryadjaya family that it should immediately settle
its financial obligations, including repaying large depositors of Bank Summa.

   Bank Indonesia, the central bank, had spent a year trying to clear up Summa's
problems, the minister said. It had injected financial aid through the purchase
of US$ 150 million in promissory notes and had devised a rescue plan, which
included the placement of a large deposit from an army foundation in the bank.

   The withdrawal of this deposit precipitated the suspension of the bank when
it could not meet its interbank obligations. BI had also installed a management
team drawn from Panin Bank, which has also expressed irritation about Bank
Summa's actions, and made recommendations on changes.

   "But the bank's majority shareholders unfortunately lacked the commitment to
follow the central bank's recommendations and Bank Summa's financial
difficulties worsened," the minister said in a statement to Parliament. "If the
bank's owners had followed the action plan suggested by the central bank, the
problem would not have become as difficult as it has."

   He blamed the Summa crisis on mismanagement and lack of professionalism and
reiterated the government's policy not to bail out failing banks or companies.
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