Ariawest International gets debt restructuring deal<\/p>\n
Dow Jones, Jakarta<\/p>\n
PT Ariawest International has reached a debt-restructuring
\nagreement, which likely will pave the way for state-owned
\ntelephone company PT Telekomunikasi Indonesia (Telkom), to buy
\nout its joint-operating partner, an official with Telkom said on
\nMonday.<\/p>\n
Telkom's president Kristiono told reporters Ariawest, which is
\n35 percent owned by AT&T Corp., has signed a memorandum of
\nunderstanding with its foreign creditors to roll over its debts
\nto 2007 from its original maturity date in April 2002.<\/p>\n
He, however, didn't provide further details.<\/p>\n
Ariawest officials weren't immediately available for comment.<\/p>\n
Telkom last year failed to close a US$370 million deal to buy
\nout Ariawest, its foreign partner in a fixed-line project in West
\nJava, as Ariawest failed to restructure its debts.<\/p>\n
Telkom has said it would pay $184.5 million to buy 100 percent
\nof Ariawest and assume its debt.<\/p>\n
Telkom expected the final deal to cost between $360 million
\nand $370 million, including Ariawest's debt.<\/p>\n
Telkom is trying to reach agreements with a number of foreign
\ntelecommunications companies that set up fixed-line projects in
\nthe 1990s.<\/p>\n
Telkom formed a joint operating partnership with Ariawest in
\n1995. Under that deal, Ariawest paid the state-owned company
\nrevenue in return for a 15-year monopoly in West Java.<\/p>\n
But after the Asian financial crash of 1997, which pushed the
\nexchange rate of the rupiah against the U.S. dollar sharply
\nlower, many of the companies, including Ariawest, complained
\ntheir revenues were barely enough to cover investment costs.<\/p>\n
Indonesia's decision to open its telecommunication business to
\nfree competition also meant Telkom had to find a way out of its
\npartnerships with foreign companies.<\/p>\n
Of the five projects with foreigners, Telkom has already
\nreached agreement to buy out three.<\/p>\n
Elsewhere, Kristiono said that Telkom had yet to reach an
\nagreement over acquisition price to takeover another joint-
\noperating partner PT MGTI, which is developing fixed-line in the
\nCentral Java-Yoyakarta area.<\/p>\n
MGTI is jointly owned by Telkom, PT Indosat, Telstra, and
\nJapan's NTT.<\/p>",
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"sponsor": "Okusi Associates",
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