Indonesia's biggest lender, PT Bank Mandiri Tbk reach deal with Plantation firm PT Bakrie Sumatera Plantations Tbk, to divest the debt and asset of Domba Mas Group. Bakrie Plantations has signed a $180 million loan agreement with Bank Mandiri last week.
The deal marked the first successful attempt by Bank Mandiri this year to retrieve bad loans from of some its big creditors, which include oleochemical and palm oil products producer Domba Mas as well as state-owned airline Garuda Indonesia. The lender aims to raise around IDR2 trillion and, in turn, improve its earnings.
The agreement also gives the Bakrie group, the plantation firm's parent company and one of Indonesia's most politically connected business empires, control over one of the country's few oleochemical plants.
Bakrie Plantations has agreed to take over Domba Mas' debt through a debt restructuring scheme with tenure starting from 18 months to seven years, with a commercial interest rate.
Domba Mas, formerly owns by Susanto Lim, total debt rose to $320 million since 2005 but the group managed to pay off some of its debt by the end of 2009. Domba Mas specialises in oleochemical and palm oil products and mainly operates in North Sumatera province, with its most prized asset a plant in Kuala Tanjung. Oleochemicals are derived from biological oils or fats and are largely used to produce bio-diesel and cosmetics.
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