IFLR 1000
The Guide to the World's Leading Financial Law Firms

Indonesia was "never really affected by the global financial crisis [but] the country now faces an escalating inflation rate with banks slowly withholding their lending", comments a leading partner. The recent disclosures of prime lending rates revealed a declining lending rate trend, largely due to increasing competition. Pricing competition in the sector will likely intensify as borrowers become more aware of the different rates being offered on the market. Currently, the rate differentials between banks with the highest and lowest lending rates and National Integration Movement (NIM) have declined to 8.4% and 5.1% respectively, down from the 21-month peaks of 11.4% and 8% respectively.

Despite short-term concerns over rising inflation weighing on Indonesian banking stocks, there is a chance of retaining the current over-priced share value. A leading banking partner believes that the "two key risks to the sector are lower spreads due to lending and funding competition, and higher credit costs".

Elsewhere, the introduction of the Indonesian Currency Law (Currency Law), which entered into force on June 28 2011, now requires the use of Indonesian Rupiah (Rp) for domestic Indonesian financial transactions. The Currency Law will require careful examination of all transactions conducted within Indonesia in currencies other than Rp and, where the Law's exemptions do not apply, adjustments will have to made to the transaction agreements in order to convert payments into Rp.

"Any payment made by or to a counterparty overseas for goods or services with an overseas component will be exempt from the requirement that it be made in Rp," says a leading partner. Proving the international element will be the key to qualifying for the exemption. One likely scenario - a transaction between an Indonesian company and the Indonesian branch of an international company - may not necessarily get exemption, particularly if the goods or services in the deal are all in Indonesia. Desicions on whether a particular transaction is indeed international will be made on a case-by-case basis.

Lending from a foreign lender into Indonesia, or to an overseas borrower by an Indonesian lender will clearly be exempt from the Rp requirement, as will trading in foreign currency within Indonesia. Similarly, the Currency Law should not impact the ability of Indonesian companies to issue or trade in financial instruments denominated in currencies other than the IDR overseas.

ABNR's banking team retains its top tier position as clients acknowledge that they are "very knowledgeable in the banking and structured finance field". "Their advice, which I've used for quite a number of years, is well considered, well constructed and amicably given", says the same client. Another client also praises the team: "I find them committed and professional."

Even rivals admire the ABNR team for being "a consistently strong banking practice", while leading lawyer and foreign counsel Theodoor Bakker comes highly regarded as "one of the leading banking lawyers in Indonesia".

Other notable lawyers for the firm include Emir Nurmansyah, who peers say has "a very magical way in handling all parties" and a "very strong banking side". Not to be disregarded is Oene Marseille: "I think Oene is one of the best lawyers at ABNR," says a client.

The team this year has been busy advising on the local law aspects of a $1 billion project financing and development for a geothermal power project in North Sumatra. The team also advised on a $100 million loan facility between ICICI Bank and local mining company Fajar Bumi Sakti.

"Assegaf Hamzah & Partners (AHP) are responsive and proactive and able to suit clients' interests," says a client of the firm. "The team is also well staffed and well-trained," comments another.

The banking team is also recognised by peers: "AHP always keep updating on commercial issues and are able to interface well with the matter at hand. Their particular legal expertise is in corporate investment. They also have an excellent network and communication with international lawyers."

Leading the banking team is partner Fikri Assegaf, who clients rate highly: "His strengths are his capability of making excellent legal opinions and finding actual legal basis for the legal opinion in the negotiation process. He has excellent legal knowledge and expertise on corporate investment. His outstanding local knowledge in the industry is first class."

This year saw the team advise Tower Bersama Group in a $2 billion bond issuance coordinated by Overseas-Chinese Banking and United Overseas Bank.

Other highlights included advising KPMG Singapore as receiver of Chuan Soon Huat on bankruptcy proceedings against PT Cemerlang Selaras Woodworking. The client is a shareholder of the bankrupt debtor.

Finally, in mid-2011 the firm was busy advising Supreme Energy Indonesia, a geothermal energy company, in relation to joint ventures worth $200 million with other international power companies for the development of three geothermal power plants.

Bahar & Partners have "deep knowledge and excellent analysis on the legal opinion on matters we entrusted them on", comments a client of the firm. The Bahar & Partners team has highly regarded practitioners that are experienced in advising project finance investors whether nationally in Indonesia or internationally in cross border transactions.

A leading partner in a rival law firm praised the team as "technically very strong", while a client adds that "Bahar have a collaborative culture, understand clients and try not to come to an immediate answer." One of the team's highly regarded practitioners is Yuliana Tjhai, commended by peers as "having good legal capacity."

The project finance team advised Indonesia Infrastructure Finance, a state-owned infrastructure company, in regard to providing schemes of dispute settlements in relation to a convertible loan agreement for project financing.

Bahar was also entrusted with representing a syndicate of local banks, jointly led by PT Bank Central Asia and PT Bank International Indonesia with regard to loan facilities (in the form of conventional loans and shariah facility) to PT Mandala Multifinance.

The loan facilities were provided through a syndication of a conventional loan and a murabaha (deferred sale) facility. The loan facilities will be used by the borrower as working capital.

Another notable highlight was representing Employee Provident Fund, a Malaysian government entity undertaking responsibility as a major shareholder of RHB Capital, in the planned acquisition of the private Indonesian bank PT Bank Mestika.

DNC Advocates At Work "are well-versed in their areas of practice and provide clear advice", says one client. "They are proactive and responsive in providing practical legal advice and solutions", comments another, while a third client chooses to go to DNC because of its "prompt client service and also its ability to provide practical legal advice and solutions".

The team was entrusted with an assignment of receivables of $183 million from GE Finance Indonesia to PT Bank Permata. The structure of this transaction required deep knowledge of Indonesian civil law. Besides the high overall transactional value, this transaction also required an in-depth knowledge of banking and finance products.

One the past year's highlights saw the firm advise Barclays Wealth Asia and tailor a template 'pledge of a shares' agreement for Barclays Wealth Management. This scheme involved a two-layer custodian's arrangement where the pledging company shall first open an account in the offshore custodian before then opening a sub-account in the custodian.

Another highlight was advising Punjab National Bank (International) and Alahabad Bank (HK Branch) on a $21 million syndicated financing to Opera Minmetals. This cross border syndicated loan involved a variety of foreign legal structures and coordination with several foreign legal counsels.

HHP is "excellent" says a client: "I think they are great, very smooth, very quick responses and their advice is always very complete." The firm once again regains its top tier status with another busy year of multiple headline transactions.

One example saw the team represent UOB Asia in a syndicated financing in relation to a debt programme agreement amounting to $2 billion with borrower PT Tower Bersama, one of the largest independent telecommunication companies in Indonesia.

The transaction is one-of-a-kind in the way the programme is structured, in that it allows the borrower to borrow up to the maximum amount independent of the new facility agreements, without the necessity to re-create the security package. Further, due to the corporate structure of the borrower, the security package is granted by several security providers, resulting in more than one hundred security documents.

Another client notes that HHP "don't provide just your normal legal work for transactions. They are able to demonstrate a complete understanding of Indonesia law".

With highlight transactions in all practices, HHP represented DBS Bank in relation to the refinancing of a facility given to PT Professional Telekomunikasi Indonesia (Protelindo) - an independent tower operating company that builds, operates and rents towers for mobile operator Base Transceiver Stations throughout Indonesia.

DBS Bank was the lead arranger and joint book-runner of syndicated lenders consisting of DBS Bank, OCBC, Standard Chartered, and RBS (Singapore branch). HHP's involvement in this $100 million transaction was preparing the security documents in drafting corporate approval and other related documents in accordance with Indonesian law.

Another notable highlight was representing Navitaire - Accenture, as a creditor in a suspension of payment proceeding of PT Mandala Airlines. The proceedings were quite public as PT Mandala Airlines is one of the biggest commercial aircraft companies in Indonesia.

A client recommends Hendra Soenardi and classifies them as "a leading law firm." Hendra Soenardi "provides really good people who understand the market, provide cutting edge ideas and new business in the banking and finance world."

The past year saw the firm advising Pulau Seroja Jaya as the shareholders of the borrower in the security grantors with PT Saratoga Investama Sedaya as the sponsor. This transaction with shipping company PT Pulau Seroja Jaya was valued at $70 million in secured term loan facility.

Another notable highlight was advising Sebuku Iron Lateritic Ores as the borrower and the shareholders of the borrower as the security grantors. This complex matter with PT Sebuku Iron Lateritic Ores was valued at $40 million secured term loan facility.

Hiswara Bunjamin & Tandjung headed by partner Tjahjadi Bunjamin is recognised as one of the pre-eminent Indonesian firms for foreign lenders and creditors in financing and debt restructurings. Foreign counsel David Dawborn is active in this area for key clients such as Goldman Sachs, UBS, Deutsche Bank and Morgan Stanley.

Praised by one client for being a "technically strong with good knowledge of Indonesian issues", the team separates itself from the competition because of the two above mentioned individuals.

"Tjahjadi Bunjamin is the partner we entrust for our transactions. He is commercially pragmatic and delivers prompt and sound advice", says a client. A rival law firm partner even went as far in commenting that "he's the go-to lawyer on international work in Indonesia".

"Dawborn is a key individual who has the advantage of having both the international perspective and also local knowledge. He is well respected within the industry," says a senior partner in a rival law firm.

A highlight for the firm this year was advising Industrial and Commercial Bank of China (ICBC), Industrial and Commercial Bank of China (Asia) and PT Bank ICBC Indonesia (ICBC Indonesia) on the ground-breaking Rmb2 billion ($310 million) offshore Sinosure-covered export financing framework arrangement provided to PT Bakrie Telecom (Bakrie).

This transaction involved the first commercial Renminbi loan provided to a company outside of China and marks an important milestone in the internationalisation of the yuan. The proceeds of the facility will be used by Bakrie to finance the purchasing of telecoms equipment from Huawei Technology. ICBC is one of China's 'Big Four' state-owned banks and the largest bank in the world by market capitalisation.

Another notable highlight was advising Credit Suisse on a $1.3 billion facility to Long Haul Holdings and PT Bakrie & Brothers in connection with a share swap transaction between Long Haul Holdings and PT Bakrie & Brothers.

The banking and finance teams at Hutabarat Halim & Rekan are led by partner Rosna Chung.

As well as leading the team, Chung also had a hand in most of the firm’s major mandates in the last year. In one example she acted alongside senior associate Antony Saragi advising AmMerchant Bank Berhad on the adjustment and transfer of a loan to GY Plantation Indonesia.

The firm also acted for both Bintang Baja Sinar Cemerlang and Ball Nirwana on various loan agreements.

Lubis Ganie Surowidjojo "handles all restructuring work in Indonesia", says a rival partner. The team has a solid record advising on bank restructurings and has acted as counsel to the Indonesian Bank Restructuring Agency.

Satisfied clients note that: "The partner you engage on a deal works on the deal and completely oversees and carries the work. As a result, the work gets done extremely well and in an efficient and productive manner."

The past year has seen the team advise PT Recapital Advisors as the buyer in a $40 million acquisition of PT Bank Eksekutif. This acquisition is for the purpose of a corporate rescue of the Bank and involved the structure of a rights issue and renouncement of shareholders' entitlement to PT Recapital Securities.

Lubis Ganie Surowidjojo "understandably receives the majority of the restructuring work in Indonesia", says a competitor.

Other notable transactions for the firm include advising the financing for the Rp350 billion ($41 million) acquisition of PT Bank Pundi Indonesia (formerly PT Bank Eksekutif Internasional - Recapital). This transaction was had a complex funding structure and had to comply with various Bank Indonesia requirements regulating acquisitions of an Indonesian bank.

The team, led by Ratna Iskandar and Gregory Ranslam, "consistently give the best and most accurate legal advice of any law firm I have worked with and generally the individuals involved in deals are fantastic", comments a client.

Another individual noted by her peers is Pudji Wahjuni Purbo, described as "a very active and very knowledgeable lawyer".

A highlight from last year saw the firm represent Syabas Energy in the initial stage of the assignment of a 10% participating interest in Block Cepu from Mobil Cepu (MCL) and Ampolex (Cepu). This transaction involved the subsidiaries of ExxonMobil Corporation and PT Pertamina EP Cepu to four local government companies.

The firm also advised Godrej Consumer Products on acquisition financing of €185 million. Godrej Consumer Products, which already owned a 49% stake in the joint-venture firm Godrej Sara Lee, recently agreed to acquire Sara Lee's 51% stake, turning the joint-venture into a fully owned subsidiary of Godrej Consumer Products.

Another notable highlight was representing PT Recapital Advisors on the financing to PT Jakarta Monorail to construct and operate the monorail as a follow up of the Cooperation Agreement made by and between DKI Jakarta and PT Jakarta Monorail.

"What is particularly exceptional with Makes & Partners is that it is not only the partners that are exceptionally skilled, knowledgeable and trustworthy, there are many layers of staff below partnership level that are equally impressive," comments one satisfied client.

The same client also acknowledges: "I know that if I instruct Makes & Partners on a matter, I have absolute trust in them. I can be sure that they are focused on solving my problems and caring for my interests; I know I am getting the best result possible".

The past year has seen the firm expand with the key additions of special foreign counsel in Kay Almajeda and Annalyn C Tayag. The two hires are significant move in keeping pace with the market's trend of increasing cross-border transactions.

In February 2011 the team was advising PT Bank Pembangunan Daerah Jawa Barat dan Banten on a Rp2 trillion ($236 million) bond offering.

Other notable highlights included advising on a first Real Estate Investment Trust (Reit) refinancing. The team acted as legal counsel for one of the prominent asset management companies in Singapore in respect of a term loan facility agreement provided by Overseas-Chinese Banking Corporation.

Showing its diversity in the banking practice, the firm advised PT Bank CIMB Niaga in dispute refinancing and debt restructuring. The team also acted as legal counsel for one of the biggest publicly-listed banks in Indonesia on a complex financing and refinancing of a coal company's subsidiary. The loan agreements totalled $55 million.

Melli Darsa & Co is considered a powerhouse in the Indonesian banking and finance field, as clients have "total belief that transactions will be handled well", says the partner of a rival law firm.

The team advised HSBC, Jakarta Branch and six other banks (including Bank of Tokyo Mitsubishi and Bank of China), with a total commitment of $250 million, in an unsecured syndicated term loan facility to PT Transportasi Gas Indonesia, the wholly owned subsidiary of publicly listed PT Perusahaan Gas Negara (Persero).

This transaction was different to a conventional syndication loan agreement as the parties broke the syndication agreement into two sets of agreements: a term loan and the inter-creditors agreement.

Another landmark transaction for the firm was completing the loan restructuring of the three companies under Raja Garuda Mas Group: PT Riau Andalan Pulp & Paper (RAPP), PT Riau Prima Energi (RPE) and PT Riau Andalan Kertas (RAK).

The deal involved a $1.1 billion loan extension to a group of companies. The debt restructuring process began in 2006 with the execution of a Principal Agreement between all debtors and creditors.

"I rate very highly their banking practice, particularly their ability to be innovative in finding solutions," says one client of Soemadipradja & Taher.

The team, led by Dezi Kirana and Linda Widyati, has been busy in advising on banking and project finance transactions. Recognised by peers as having "a good finance practice" in Indonesia, the team undertakes work for major national and international companies.

Recent notable roles have seen the firm advise ANZ Banking Group on various structured financing transactions and PT Bank Muamalat Indonesia on its Rights Issue IV, which included conducting due diligence.

International work involved advising the International Finance Corporation (IFC) on the financing of various projects in Indonesia, including a project for an oleo-chemical company.

The biggest highlight in the past year for Soemadipradja was advising PT Newmont Nusa Tenggara on the project financing of infrastructure for the expansion of the Batu Hijau mine. Indonesian firm PT Newmont Nusa Tenggara (NNT) secured a $600 million credit facility to fund its expansion plan at its Batu Hijau gold and copper mine in West Nusa Tenggara, Indonesia. NNT received the loan from a syndicate of 16 banks led by Bank Mandiri, France's BNP Paribas and Japan's Sumitomo Mitsui Banking Corporation.

"SSEK is a very well known and respected project finance firm", comments a rival law firm. One client adds that SSEK produces "strong work generally and I've found their responses are well thought out".

Another rival partner praises partner Ira Eddymurthy as "not only a good lawyer but she is also very resilient", and special foreign counsel Michael Twomey for having "a lot of experience and being a good operator who is very knowledgeable".

Clients also appreciate the firm's up to date knowledge of the law: "The new laws have impacted our project and with nobody fully understanding the operation of a new law with no clear precedence, SSEK found a solution," says one.

The banking team advised Chartis Insurance (formerly AIU Insurance) in connection with the restructuring of PT Chartis Indonesia, one of the largest insurance companies in Indonesia. SSEK worked closely with the Indonesian Insurance Bureau, the Ministry of Finance and the Capital Investment Coordinating Board to substitute a new local shareholder in this transaction.

The team also advised PT Arpeni Pratama Ocean Line on the ongoing complex debt restructuring of a large shipping company, which operates ships in both Indonesian and international waters. This transaction involved domestic and foreign debt including US dollar bonds, Rp bonds, and Rp sukuks (Islamic bonds).

Another notable highlight was advising Adani Group India and its Indonesian subsidiary, PT Adani Global, in connection with a $1.6 billion rail and port infrastructure project in South Sumatra.