Indofood appeals UK court ruling<\/p>\n
Soraya Permatasari, Bloomberg\/Jakarta<\/p>\n
PT Indofood Sukses Makmur, the world's biggest maker of instant
\nnoodles, appealed a UK court ruling that rejected the company's
\nplan to buy back US$154 million of bonds at their face value.<\/p>\n
The Jakarta-based company submitted its notice of appeal
\nagainst the Aug. 2 court ruling on Nov. 4, Djoko Wibowo, a
\ndirector at Indofood, said in a telephone interview on Wednesday.<\/p>\n
Indofood had planed to buy back at face value the outstanding
\n$154 million out of $310 million in dollar-denominated bonds sold
\nby its Mauritius-based unit, Indofood International Finance Ltd.,
\nbefore they mature in 2007.<\/p>\n
The company wants to buy back the bonds to avoid paying higher
\ntaxes after the Indonesian government in January scrapped a tax
\ntreaty with Mauritius. The change doubled to 20 percent the
\nwithholding tax Indonesia deducts at source from the interest
\nincome on the bonds. Indofood is liable to pay for the increase
\nbecause it agreed to pay investors a return net of tax.<\/p>\n
Bondholders rejected a previous offer by Indofood to buy back
\nthe debt at a price higher than face value because it was still
\nlower than the market price.<\/p>\n
According to an agreement between the company and the trustee,
\nJP Morgan Chase Bank NA, when the bonds were sold, any disputes
\nwill be settled through a British court.<\/p>\n
Should a court decision on the appeal come late next year,
\nIndofood may choose to cancel the buyback plan because that would
\nbe close to the maturity of the bonds, Wibowo said.<\/p>\n
Indofood had $179.5 million of U.S.-dollar debt outstanding as
\nof Sept. 30, including bonds sold by its Mauritius unit. As of
\nSept. 30, the company bought back $156.33 million of the unit's
\nbonds, it said on Oct. 27.<\/p>\n
Indofood sold the 10.375 percent bonds on June 11, 2002. The
\nfive-year debt maturing on June 8, 2007, was sold at a discount
\nof 99.05 cents to the dollar, according to Bloomberg data at the
\ntime of pricing. The bonds were bid to yield 8.126 percent,
\naccording to Credit Suisse First Boston prices as of 10:18 a.m.
\nin Jakarta.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indofood-appeals-uk-court-ruling-1447893297",
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