Jakarta court derails StanChart's bid to recoup $1.4b
STANDARD Chartered, struggling to recoup a US$1 billion (S$1.4 billion) loan extended to one of Indonesia's richest men, has hit fresh trouble after a Jakarta court excluded it from a key creditor list and raised doubts over the validity of the underlying deal.
Standard Chartered is dealing with heavy losses from commodities loans granted over the boom years. Many of the loans soured as prices tumbled to historic lows. Last year, the lender sank to its first loss in almost three decades.
The US$1 billion loan was made to mining tycoon Samin Tan's coal firm, Borneo Lumbung Energi & Metal Tbk.
It was one of the bank's largest exposures to one borrower, sources at the lender said.
Backed by Tan's coal assets, it was approved in 2011, helping him to buy out a rival billionaire's stake in now defunct miner Bumi Plc.
That year, it was the single-largest underwritten loan by any bank in Asia, according to Thomson Reuters data.
Standard Chartered has made a push to reclaim the Tan cash, under a new boss who is trying to repair the bank's balance sheet and claw back bad debts.
As of September, the bank was owed more than US$700 million, due by 2019.
It had sought to join the list of creditors after Borneo's largest mine suspended repayments and sought protection.
But its demand for repayment was thrown out last week by the Jakarta court administering the debt plan for the mine, Asmin Koalindo Tuhup (AKT). The court said it was unclear the Standard Chartered loan was used to develop AKT.
A lawyer acting for AKT said the loan was to the parent, even if AKT was used as collateral.
Court documents obtained by Reuters show the bank's claim for more than US$628 million from AKT was rejected.
A similar request for US$104 million made by Singapore trader Noble was also turned down.
Among the handful of accepted creditors are parent Borneo itself, equipment-maker Caterpillar and Australia and New Zealand Banking Group, owed a total of just under US$1 billion.
This will mean that when coal prices recover, AKT will repay its approved debtors first and only then will it hand cash to the parent, which in turn should pay the bank - delaying any repayment.