OMETRACO GROUP THREATENED WITH BANKRUPTCY.
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 and non performing credits have beset 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) 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 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
Detail 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, securities - 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 through the Central Jakarta District Court on September 8, 1998. The bank creditors include American Express Bank, Singapore Listed Overseas Chinese Banking Corp., Royal Bank of Canada, Bank Expor Impor Indonesia, Union de Banques Arabes et Francaises, Bank Internasional Indonesia and Bank Negara Indonesia. 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 Realty 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 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 in Surabaya and Apartment Tropic in Jakarta. In retail business it is a shareholder in Mall Blok M 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 in PT Bimantara Eka Santosa (PT Plaza Indonesia Realty. This company has built a shopping center 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 Finance: -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 Industry: -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 Property: -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 development -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 development -Wisma Mukti, PT Housing development -Wisma Ometraco Perkasa, PT Office complex development Agribusiness: -Multiphala Adiputra, PT Broiler farming -Multi Farm, PT Broiler farming -Suri Tani Pemuka, PT Shrimp breeding -Multibreeder Adirama Indonesia, PT Poultry breeding Trade: -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