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Finance business collapses

The Ometraco Group is facing a complicated problem that has pushedd it to the brink of bankruptcy. Its business pillar in the financial sector, Bank Tiara has been taken over by the government. The bank was badly hit by the crisis. Mismanagement mis·man·age  
tr.v. mis·man·aged, mis·man·ag·ing, mis·man·ag·es
To manage badly or carelessly.

mis·manage·ment n.
 and non performing credits have beset be·set  
tr.v. be·set, be·set·ting, be·sets
1. To attack from all sides.

2. To trouble persistently; harass. See Synonyms at attack.

 the bank. The bank has received Rp 2.5 trillion in liquidity credit from the Central Bank. After failing to improve performance despite the large loan assistance in the form of liquidity credit from the Central Bank, the bank was put under the control of the National Banking Restructuring Agency (BPPN BPPN Badan Penyehatan Perbankan Nasional ) before finally it was taken over by the government in August, 1998. It was reported that the liquidity credit exceeded the assets of the bank. The assets of the bank were valued only at Rp 2.1 trillion. The government may decide to seize the assets of Ometraco to compensate for the balance. The government has prepared move to bring to court the cases of the banks failing to repay their loans to the central bank.

The demise of the banking business of the group is feared to badly affect its other business pillars, which have used large funds from Bank Tiara. Other core businesses of the group are livestock farming and animal feed manufacturing, property development, semi conductor and electric equipment manufacturing.

Its businesses in the property sector, semi conductor industry and electrical equipment industry were among the first to crumble crum·ble  
v. crum·bled, crum·bling, crum·bles
To break into small fragments or particles.

1. To fall into small fragments or particles; disintegrate.
 after its banking business. Also battered is its business in the livestock farming and animal feed sector, but being an integrated business it is more resistant. But in general the condition of the Ometraco Group is discouraging and vulnerable to crisis. It is feared that it could not last much longer if the crisis continues.

Table - 1 Profile of Ometraco Group

Parent company        : PT OMETRACO CORPORATION
Address               : Wisma Bank Tiara 8th Floor
                        Jl. M.T. Haryono Kav. 16
City                  : Jakarta 12810
Phone (s)             : (021) 8310260, 8310333 (Hunting)
Fax.                  : (021) 8310254, 8310331
Number of companies   : 77 Companies

Lines of business:    - Finance:
                        Banking, insurance, leasing,
                      - Industry:
                        Animal feed, electric equipment,
                         semi conductor,
                         electronic component,
                         polyester film and
                         rubber hand glove manufacturing
                      - Property:
                        Apartment, housing, hotel,
                         office building and tourism
                         center development
                      - Agribusiness:
                        Integrated poultry farm,
                         shrimp breeding
                      - Trade:
                        Distribution of computer sets
                         and electric equipment,
                         animal husbandry
                         products mainly chickens.
                      - Etc.
Total assets          : 1997 - Rp 15 trillion (estimates)
Sales turnover        : 1997 - Rp 1,105 billion (estimates)

Chairman              : -Mr.  Ferry Teguh Santosa alias
Other key persons             Kang Som Tjhiang
                      : -Mr.  Boyke Gozali
                        -Mrs. Carla Widjaja
                        -Mr.  David Setyadji
                        -Mr.  Handojo Santoso
                        -Mrs. Tati Gozali

Source: Data Cosult

Pressed by creditors

Still busy trying to wriggle out of the problem after being jolted by the collapse of a number of its business pillars, the Ometraco Group is confronted with a more complicated problem that could bring it to its total demise. A number of its bank creditors have openly demanded that PT Ometraco Corporation, the holding company of the group, be declared bankrupt. The demand for bankruptcy has been field with the bankruptcy court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties.  through the Central Jakarta Central Jakarta (Indonesian:Jakarta Pusat) is a city of Jakarta, Indonesia. It has an area of 48.17 km², the smallest among five cities of Jakarta. The current city's mayor is Muhayat.  District Court on September 8, 1998. The bank creditors include American Express Bank, Singapore Listed Overseas Chinese A list of famous people with Chinese ancestry living outside of the Republic of China and the People's Republic of China. Leaders and politicians
  • Steve Chia, politician, Singapore 谢镜?
 Banking Corp., Royal Bank of Canada Bank of Canada

Canada's central bank, established under the Bank of Canada Act (1934). It was founded during the Great Depression to regulate credit and currency. The Bank acts as the Canadian government's fiscal agent and has the sole right to issue paper money.
, Bank Expor Impor Indonesia, Union de Banques Arabes et Francaises, Bank Internasional Indonesia and Bank Negara Indonesia Bank Negara Indonesia, commonly known known as BNI, is an Indonesian bank. It has branches primarily in Indonesia, but also in Singapore,Hong Kong,London, and New York. It has 1000 branches and 9 million customers. . It was reported that the Ometraco Group has a debt of US$ 100 million to those banks.

The company group is now reeling dangerously especially after its participation capital in a number of public companies have been frozen. For example, its shares in Bank Tiara have been taken over BPPN.

By the end of September, 1998, the group sold its shares in PT Plaza Indonesia Plaza Indonesia is located in central Jakarta and is often referred as PI. Plaza Indonesia is the first high end shopping centre in Indonesia. Having opened its doors since 1990, Plaza Indonesia is located on the prominent corner of Jakarta's famous landmark, the selamat datang  Realty realty n. a short form of "real estate." (See: real estate)

REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property.
 to PT Taspen. The group is expected to seek to sell more assets before the bankruptcy demand comes to reality. The group may use the fund from the sales of assets to repay its short term debts to ward off the bankruptcy threat.

Meanwhile, its bank creditors have continued to press for immediate settlement. The company group could actually repay its debts through the selling of its shares in various other companies. PT Ometraco Corporation is a direct or indirect shareholder in tens of companies. Many of its assets are still sellable such as its shares in Novotel Hotel; & Residence in Surabaya, Hotel Ibis Ibis is an international hotel company, owned by Accor hotels. It has 767 hotels worldwide, with over 370 in France and most of the remainder elsewhere in Europe. The hotels are generally close to city centres, airports or rail stations, offering budget rates.  in Surabaya, Mercure Grand in Jakarta, Sheraton Nusa Indah Resort Bali, and Grand Hyatt in Jakarta. It also has shares in Bukit Tiara housing project in Tangerang, Villa Bukit Indah Bukit Indah is a main township in Johor Bahru, Johor, Malaysia. It is owned by Setia Homes a member of SP Setia Berhad.

 in Surabaya and Apartment Tropic in Jakarta. In retail business it is a shareholder in Mall Blok M Blok M is a business and shopping quarter located in Kebayoran Baru, South Jakarta, Indonesia. The development is less modern than some of the developments near Kota, Central Jakarta and many of the buildings are run down.  and Plaza Indonesia Realty.

PT Ometraco Corporation was for the time being saved by the bankruptcy court by declaring that the demand for bankruptcy was flawed and the creditors had no enough ground to proceed their demand. But the problem would not stop there. The creditors could still go to the appeal court. For sure the group has been battered not only financially but also in reputation.

Starting as a trading company

Ferry Teguh Santosa the owner and founder of the company group is an old hand in business. He started his business career in 1959 when he set up PT Perusahaan Dagang dan Industri Ometraco or PT Ometraco for short. The company, which was the embryo of the Ometraco Group, operated as a sole agent and distributor for various products of technical equipment such as industrial machineries, animal feed processing machines, etc.

The company's business thrived allowing it to set up a number of subsidiaries. The group expanded rapidly over the years and emerged a big conglomerate before the monetary crisis crippled it.

The group has established cooperation with a number of other conglomerates including the Bimantara Group and the Sinar Mas Group Sinar Mas Group is one of the largest comglomerates in Indonesia. It was formed in 1962. It has many subsidiaries including APP.

Sinar Mas Group was founded by Eka Cipta Widjaja. Its main businesses are: Pulp and Paper, Agribusiness, Property and Financial Services.
 in PT Bimantara Eka Santosa (PT Plaza Indonesia Realty. This company has built a shopping center shopping center, a concentration of retail, service, and entertainment enterprises designed to serve the surrounding region. The modern shopping center differs from its antecedents—bazaars and marketplaces—in that the shops are usually amalgamated into  and hotel in the most prestigious district in Jakarta, Jalan Thamrin. It also has cooperated with foreign investors including Sheraton Inn in PT Inti Insan Lestari operating in hotel business; and with Hyatt International in PT Plaza Indonesia Realty also in hotel business.

Table - 2 Companies of wholly or partly owned by Ometraco
Name of company                       Line of business

-Bank Tiara Asia, PT                  Banking
-Ometraco, PT                         Investment holding
-Ometraco Corporation, PT             Holding company
-Ometraco Multi Artha, PT             Consumer financing
-Asuransi Atraco, PT                  Insurance
-Asuransi General
 Accident Ometraco, PT                Insurance
-Cipta Inti Multiperdana, PT          Consumer financing
-Inti Sekuriti Investama, PT          Securities business
-Ometraco Finance, PT                 Leasing

-Japfa Comfeed Indonesia, PT          Animal feed
-Trafindo Perkasa, PT                 Transformer
-Alisindo Perkasa, PT                 Mini circuit breaker
-Dwipangga Gula Prima, PT             Sugar refinery
-Finneco Perkasa, PT                  Polyester film
-Indopell Raya, PT                    Animal feed
-Merlin Gerin Indonesia, PT           Electrical equipment
-Multiphala Agrinusa, PT              Animal feed
-Omedata Electronics, PT              Computer assembling
-Putera Ometraco Electric, PT         Electrical cable
-Schneider Indonesia, PT              Electrical equipment

-Indonesia Prima Property, PT         Property development
-Agung Ometracomuda, PT               Housing and office
                                       building development
-Angkasa Interland, PT                Housing development
-Bali Turtle Island                   Integrated tourism
 Development, PT                       development
-Bina Maju Graha, PT                  Apartment development
-Graha Hexindo, PT                    Housing development
-Graha Mitrasantosa, PT               Housing and office
                                       building development
-Graha Metropolitan Nusantara, PT     Property development
-Griyamas Muktisejahtera, PT          Hotel development
-Inti Intan Lestari, PT               Hotel development
-Kharisma Insansantosa, PT            Apartment and hotel
-Mahardhika Girindra, PT              Hotel development
-Nusadua Graha International, PT      Hotel development
-Ometraco Hotel Bogor, PT             Hotel development
-Panen Lestari Basuki, PT             Property
-Plaza Indonesia Realty, PT           Shopping center
-Wisma Mukti, PT                      Housing development
-Wisma Ometraco Perkasa, PT           Office complex development

-Multiphala Adiputra, PT              Broiler farming
-Multi Farm, PT                       Broiler farming
-Suri Tani Pemuka, PT                 Shrimp breeding
-Multibreeder Adirama Indonesia, PT   Poultry breeding

-Ciomas Adisatwa, PT                  Poultry trade
-Indonesia Indah Ltd., PT             Trade
-Merlin Gerin Omelel, PT              Trade
-Nurani Mukti Indah Ltd., PT          Trade
-Oteesa, PT                           Trade
-Soesanco, PT                         Trade

Source: Data Consult
COPYRIGHT 1998 P.T. Data Consult, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
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Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Nov 9, 1998

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