A FINANCE company with links to Indonesia's Suharto family is seeking to issue more than $200m in high-yield bonds in the most public international deal associated with the former first family and its business empire since its 1998 fall. Noble Finance, a Netherlands-registered company, is working with adviser Citigroup to issue the bonds, which will be listed in Singapore and have been rated B by Fitch and Standard & Poor's.
The bonds are to be guaranteed by three companies affiliated with Indonesia's Mulia group: they operate a prominent Jakarta hotel, a shopping mall and an office tower. The proceeds are to be used to refinance the debts of those three assets.
The Mulia Group is the family conglomerate of Djoko Chandra, a key figure, in a 1999 banking and fund-raising scandal linked with President Suharto's one-time political vehicle, Golkar.
But two of the three guarantors have strong links to the former first family and the far-reaching business empire it built up during the former general's rule. Mr Suharto resigned in May 1998 after 32 years as president. He was considered by many to have headed one of the world's most brutal and corrupt regimes. According to watchdog Transparency International, he and his family amassed $35bn during his rule. In May, corruption charges against Mr Suharto were dismissed but many Indonesians continue to call for him and his children to be brought to trial.
According to people close to the deal, Mr Suharto's second daughter, Siti Hediati Hariyadi, is the chairwoman of Mulia Intipelangi, the mall company. Mr Suharto's brother-in-law, retired general Wisnfoyo Arismunandar, heads the company controlling Jakarta's Mulia Hotel.
Citigroup declined to comment. It is also unclear whether anyone from the family still owns any portion of the relevant companies. But according to people who have seen drafts of the prospectus due to be given to investors, the role of the Suharto relatives in those companies is not mentioned. The bonds include tight controls on cash generated by the hotel, mall and office tower. "They have put in a lot of structures to protect the cashflows," said Kalai Pillay, head of Fitch's Asian property, infrastructure and transport group.
The controls are designed in part to escape the shadow of more than $200m still owed to creditors by another Mulia Group affiliate, Mulia land, of which Mulia Intipelangi was a part until 2003.
Since October 1998, Mulialand has made neither interest nor principal payments on $200m in bonds it issued in 1996 and analysts say efforts by creditors to secure a restructuring have failed. A spokeswoman for Mulialand declined to comment.
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