In this project, Group II Executive January 2001 (the "Group) is pursuing strategic initiatives to revitalize the financial sustainability that will strengthen the potential growth of PT Group Dua Energy -an Independent Power Producer company (the "Company" or "GDE"). The Company is managing a 60 MW geothermal power plant in Central Java and a geothermal project in West Java. Having a financial distress condition, GDE currently is struggling to fulfill its huge debt obligation with limited asset value. Obviously, the management of GDE is facing a tremendous challenge to overcome due to insufficient operating cash flow to service the debt; meanwhile they have to maintain the sustainability the company as well as the business growth.

Under present circumstance, the Group observes that it will be difficult, if not impossible, for the Company -as a commercial entity -to accelerate the growth of its business and cash flow to match the excessive matrilineal debt obligation and to deliver the expected shareholders value. Thus, the Group will endeavor to address the following critical issues challenging the Company:

-The Company has to leverage its existing assets of power plant and geothermal resources, as well as its intangible assets (e.g. technology competency, human capital, shareholders commitment) to sustain the business viability, which ultimately will improve the recovery rates for inherited debt to the government and bank syndication.

-Only with securing the financial sustainability, GDE can explore opportunities to expand its assets and revenue base that eventually will enable the Company to deliver the maximum shareholders' value.



Research Location: P. T. Group Dua Energy

Supervisor: Dr. Junius Tirok, MBA

Accepted: 15 August 2003



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