Astra gets debt reprieve from creditors<\/p>\n
Dow Jones, Singapore<\/p>\n
Indonesia's largest car and motor cycle maker PT Astra
\nInternational won agreement from its creditors Thursday to
\nrestructure outstanding debt worth US$850 million.<\/p>\n
At a meeting in Singapore, Astra's creditors gave the green
\nlight for the company to repay only half of its debt by the 2006
\ndue date. At that time, the company will have the option of
\nrefinancing the remaining debt, or rescheduling it to 2009 with
\nexisting creditors, depending on market conditions. The plan also
\nallows Astra to raise between $100 and $150 million through a
\nrights issue in January, part of which will go to repaying debt.<\/p>\n
Astra's debt pact with creditors gives the company breathing
\nspace to continue operating without the threat of falling into
\ndefault, said Ferry Wong, an analyst at BNP Paribas in Jakarta.
\nBut the company, which is 32 percent owned by Singapore's Cycle &
\nCarriage Ltd., must push ahead with planned asset sales next year
\nto reduce its still hefty debt, he added.<\/p>\n
Plans to sell part of the company's 51 percent stake in a
\nlocal car-making joint venture with Japan's Toyota Motor Corp.
\nhave been in the cards for the past year. Astra has said its in
\npreliminary talks to sell majority control in the business to
\nToyota, but added it wouldn't do so at a fire-sale price.<\/p>\n
Creditors have complained about Astra's slow pace of asset
\nsales since the 1997-98 Asian financial crisis, and the ensuing
\ncollapse of the rupiah ballooned the company's foreign debt in
\nlocal currency terms.<\/p>\n
Astra was able to reach a restructuring agreement with
\ncreditors in 1999, but less than stellar car sales in recent
\nyears and the failure to sell assets, in part due to the poor
\ninvestment climate in Indonesia, meant the company had to go back
\nto its creditors.<\/p>\n
Last month, Astra's creditors failed to turn up in sufficient
\nnumbers for a similar vote in Singapore amid talk that a number
\nof the company's bondholders were not willing to accept a plan
\nwhich asked them to reschedule debt, and had no provisions for
\nassets sales. Japanese and European banks, which control the
\nsteering committee, including ABN Amro Holding NV (ABN) and BNP
\nParibas SA from Europe and three Japanese banks, Mizuho Holdings
\nInc., Sumitomo Mitsui Banking Corp. and UFJ Holdings Inc., agreed
\nto the plan earlier this year.<\/p>\n
\"I think they (bondholders) eventually realized that it was in
\nthe best interests of every lender as well,\" Astra Finance
\nDirector John Slack told reporters. \"There's no quick solutions,
\nno ability to get a better deal out of Astra at this juncture.\"<\/p>\n
Under the debt plan, Astra plans to repay $75 million by Dec.
\n31, about half the amount which is set to come due this year. The
\ncompany will repay on average, between $70 million and $100
\nmillion every year thereafter through 2006. At that time, the
\ncompany will attempt to refinance the remaining debt.<\/p>\n
The rights issue in January will go to helping repay this
\ndebt, and perhaps to repurchase some debt on the secondary bond
\nmarket, Slack said.<\/p>\n
Astra plans to detail its rights issue plans Dec. 17 in
\nJakarta, and will then seek approval from its shareholders Dec.
\n20 to proceed with the issue.<\/p>\n
Cycle & Carriage has indicated it will subscribe to its full
\nshare of the issue.<\/p>\n
\"There are other standby buyers who've indicated interest as
\nwell,\" Slack said, although he declined to name them.<\/p>\n
Astra expects the rights issue to be priced between Rp 500
\n(5.6 cents) and Rp 2000, with UBS Warburg, JPMorgan Chase Bank
\nand ING underwriting the issue, Slack said.<\/p>",
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