Analysts welcome new Astra debt initiative

Analysts welcome new Astra debt initiative

JAKARTA (JP): Securities analysts have welcomed PT Astra
International's new attempt to buy back part of its debts but
were surprised at the offering price proposed by the country's
largest automaker to its creditors.

Vickers Ballas Tamara Securities said in its daily market
review that Astra's offer of spending up to US$45 million to buy
back some of its US$1.17 billion in secured debts to its
creditors was unattractive as the pricing was too low.

"We believe that the repurchase price that Astra is offering
is too low (a 75 percent discount to its par value) and therefore
unattractive for the creditors," Vickers Ballas said.

Astra International said on Thursday that it was offering to
repurchase part of its total debts at 25 percent of the par
value.

Astra's total debt to be repurchased is worth US$450 million
and consists of $125 million in convertible bonds due in 2006
(bond A), $125 million in notes due in 2001 (bond B), $200
million in guaranteed bonds due 2003 (bond C), and Rp 400 billion
in bonds in local currency due in 2002.

The Astra International Group is currently saddled with a
total of $2 billion in foreign debt obligations and Rp 2 trillion
in local currency debt.

Vickers Ballas said that the fair value for bonds A, B and C
was 75 percent of face value.

"As Astra is offering around 25 percent of the par value, the
company is seeking a 50 percent 'haircut'," Vickers Ballas Tamara
said.

Meanwhile, the head of research of Panin Sekuritas, Anton
Karlam, said Astra's efforts to put up such a new offer, despite
being low, should be welcomed amid this economic slump.

"Though the amount is small, it remains positive in the
perspective of foreign investors," he said.

He said that most of the country's conglomerates, which had
run up huge overseas debts, were now seeking the best solution to
keep them afloat.

"Some conglomerates are seeking as much as 50 percent in debt
'haircut'," he said, pointing out that the country's daunting
economic and political crises have caused most companies to go
bankrupt technically.

The country's private corporations are burdened with a total
of US$80 billion in overseas debt causing them a lot of headaches
as the rupiah's sharp fall against the American dollar has
increased their overseas debts tenfold in rupiah terms.

Vickers Ballas said that Astra International's efforts to
restructure its huge debts would not be easy as some of its
foreign creditors like the Sanwa Bank-led consortium and Tokai
Bank had insisted Astra is in default and were demanding full and
immediate payment on the interest owed on its debts.

"For any payments to be made, a unanimous agreement among its
creditors is required, which we believe is difficult to achieve,"
Vickers Ballas said.

Astra International has proposed a partial payment of interest
on around US$2 billion in overseas debts, seeking to break an
impasse in its talks with its offshore creditors, mostly
Japanese banks last year, but some of these banks have rejected
the idea. (aly)