Market awaits Astra's debt solution<\/p>\n
JAKARTA (JP): Analysts have welcomed PT Astra International's
\nplan to restructure its US$1 billion in debt, saying it could set
\na positive precedent for corporate debt restructuring in the
\ncountry.<\/p>\n
Any delay or failure in Astra's debt restructuring plan would
\ncomplicate debt solution not only for Astra but also for other
\ncompanies, they warned.<\/p>\n
The approval by Astra's shareholders last week of the
\ncompany's debt restructuring plan should smooth the way toward a
\ndebt solution for the company, they said.<\/p>\n
"We are pleased with this progress. This sends a good signal
\nto the market that Astra could get through this process," the
\nassociate director and head of equity sales at Bahana, Andre
\nCita, said on Friday.<\/p>\n
Astra earlier said that after getting approval from
\nshareholders, it would meet creditors this week to present them a
\ncomprehensive debt restructuring proposal and then hold a vote on
\nthe restructuring plan on April 21.<\/p>\n
Under the company's restructuring plan, debt totaling some $1
\nbillion would be divided into three tranches, with the first
\ntranche totaling $200 million and Rp 235 billion (21 percent of
\ndebt); the second tranche would total $647 million and Rp 760
\nbillion (68 percent of debt); and the third tranche would total
\n$100 million and Rp 117 billion (11 percent of debt).<\/p>\n
The plan calls for a three-year repayment period for the first
\ntranche, with full interest payment and a one-year grace period
\non the principal payment.<\/p>\n
The second tranche would have a six-year repayment period,
\nwith a six-month grace period on the interest payment and a
\nthree-year grace period on the principal payment.<\/p>\n
The third tranche would comprise seven-year zero coupon loans
\nor bonds with warrants. Astra would issue warrants which would
\nconvert into shares amounting to more than 10 percent of the
\ncompany's issued share capital.<\/p>\n
Apart from this restructuring plan, Astra earlier held a debt
\nbuyback which attracted only $24.3 million of unsecured debt.<\/p>\n
Astra president Rini M.S. Soewandi said she was confident
\nmost of the creditors would approve the company's restructuring
\nplan.<\/p>\n
If the plan is approved, some analysts said, Astra would
\nbecome the first of Indonesia's troubled corporate giants to
\nsucceed in overall debt restructuring.<\/p>\n
"If Astra -- one of the blue chips on the Jakarta Stock
\nExchange -- fails in its debt restructuring, I cannot imagine
\nwhat will happen to other troubled listed companies," one analyst
\nat a local securities house said.<\/p>\n
"Therefore, Astra's debt restructuring plan must not fail. It
\nmust be successful because it will become the barometer for our
\ncorporate debt restructuring."<\/p>\n
Another analyst, however, expressed skepticism over the plan.
\nHead of research at BNI Securities, Adrian Rusmana, said the
\npackage would not be attractive to creditors.<\/p>\n
Regarding the company's plan to issue new shares worth up to
\n25 percent of issued share capital, Adrian suspected Astra would
\noffer a debt-to-equity deal to creditors.<\/p>\n
If the amount of new shares covers the $1 billion debt, it
\ndefinitely would be unattractive to creditors, he said.<\/p>\n
The plan also would affect minority shareholders because the
\nnew shares issue, together with the planned warrants issue, would
\ncause a 35 percent delusion in ownership, he said.<\/p>\n
Astra shareholders, however, set the price of the new shares
\nat a minimum of Rp 1,200.<\/p>\n
Astra shares fell back to Rp 800 on Friday after surging by Rp
\n125 to Rp 900 on Thursday.<\/p>\n
Rini said, however, that Astra had no immediate plan to issue
\nnew shares.<\/p>\n
"It's only an authorization from shareholders to issue new
\nshares if there is a need. For example, for the purpose of a
\ndebt-to-equity conversion requested by creditors."<\/p>\n
However, she added no creditors had asked for a debt-to-equity
\nswap during debt restructuring talks.<\/p>\n
Rini maintained the debt restructuring plan would not require
\ncreditors to write off their debt, and she asserted creditors
\nwould be paid back in seven years.<\/p>\n
Astra will sell up to Rp 3 trillion worth of assets in three
\nyears to support its debt restructuring plan, Rini said. However,
\nif Astra's operation improves significantly within this period,
\nenabling it to service its restructured debt, Astra will not
\ncontinue selling its assets.<\/p>\n
Rini said the company had $62.5 million cash on hand for
\ninterest payments, expected to resume in July if creditors agree
\nto Astra's proposal.<\/p>\n
"If the deal happens, this will give us more time to settle
\nour obligations and also to improve our performance so Astra will
\nnot only be strong in the domestic market but also capable of
\nentering the international market."<\/p>\n
"We also hope our debt restructuring plan, if we can achieve
\nit, will encourage corporate restructuring in general, especially
\nin the real sector." (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/market-awaits-astras-debt-solution-1447893297",
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"sponsor": "Okusi Associates",
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