Analysts welcome new Astra debt initiative<\/p>\n
JAKARTA (JP): Securities analysts have welcomed PT Astra
\nInternational's new attempt to buy back part of its debts but
\nwere surprised at the offering price proposed by the country's
\nlargest automaker to its creditors.<\/p>\n
Vickers Ballas Tamara Securities said in its daily market
\nreview that Astra's offer of spending up to US$45 million to buy
\nback some of its US$1.17 billion in secured debts to its
\ncreditors was unattractive as the pricing was too low.<\/p>\n
\"We believe that the repurchase price that Astra is offering
\nis too low (a 75 percent discount to its par value) and therefore
\nunattractive for the creditors,\" Vickers Ballas said.<\/p>\n
Astra International said on Thursday that it was offering to
\nrepurchase part of its total debts at 25 percent of the par
\nvalue.<\/p>\n
Astra's total debt to be repurchased is worth US$450 million
\nand consists of $125 million in convertible bonds due in 2006
\n(bond A), $125 million in notes due in 2001 (bond B), $200
\nmillion in guaranteed bonds due 2003 (bond C), and Rp 400 billion
\nin bonds in local currency due in 2002.<\/p>\n
The Astra International Group is currently saddled with a
\ntotal of $2 billion in foreign debt obligations and Rp 2 trillion
\nin local currency debt.<\/p>\n
Vickers Ballas said that the fair value for bonds A, B and C
\nwas 75 percent of face value.<\/p>\n
\"As Astra is offering around 25 percent of the par value, the
\ncompany is seeking a 50 percent 'haircut',\" Vickers Ballas Tamara
\nsaid.<\/p>\n
Meanwhile, the head of research of Panin Sekuritas, Anton
\nKarlam, said Astra's efforts to put up such a new offer, despite
\nbeing low, should be welcomed amid this economic slump.<\/p>\n
\"Though the amount is small, it remains positive in the
\nperspective of foreign investors,\" he said.<\/p>\n
He said that most of the country's conglomerates, which had
\nrun up huge overseas debts, were now seeking the best solution to
\nkeep them afloat.<\/p>\n
\"Some conglomerates are seeking as much as 50 percent in debt
\n'haircut',\" he said, pointing out that the country's daunting
\neconomic and political crises have caused most companies to go
\nbankrupt technically.<\/p>\n
The country's private corporations are burdened with a total
\nof US$80 billion in overseas debt causing them a lot of headaches
\nas the rupiah's sharp fall against the American dollar has
\nincreased their overseas debts tenfold in rupiah terms.<\/p>\n
Vickers Ballas said that Astra International's efforts to
\nrestructure its huge debts would not be easy as some of its
\nforeign creditors like the Sanwa Bank-led consortium and Tokai
\nBank had insisted Astra is in default and were demanding full and
\nimmediate payment on the interest owed on its debts.<\/p>\n
\"For any payments to be made, a unanimous agreement among its
\ncreditors is required, which we believe is difficult to achieve,\"
\nVickers Ballas said.<\/p>\n
Astra International has proposed a partial payment of interest
\non around US$2 billion in overseas debts, seeking to break an
\nimpasse in its talks with its offshore creditors, mostly
\nJapanese banks last year, but some of these banks have rejected
\nthe idea. (aly)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/analysts-welcome-new-astra-debt-initiative-1447893297",
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