Ariawest finishes debt restructuring agreement

JAKARTA (JP): PT Ariawest International announced on Saturday it had closed a debt restructuring deal with creditors and vendors.

The company said the deal included the rescheduling of a US$212 million project financing loan and $57 million owed to vendors.

The deal also involved the injection of cash by Ariawest shareholders, including Artimas Kencana Murni, which has a 52.2 percent stake in the company, MediaOne International BV, with a 35 percent and the Asian Infrastructure Fund with 12.5 percent, the company said in a statement.

"We, the shareholders, have agreed to inject further equity, given the assurance from the Ministry of Communication that the joint-operations scheme (KSO) will quickly move to a joint- venture corporation," Thomas E. Pardun of MediaOne International BV said.

Restructuring of the privately owned fixed-line telephone operator and constructor Ariawest involved 36 banks, six vendors and three shareholders, he said.

Ariawest president John G. Vondras said the deal was finalized in Jakarta, Singapore and the Netherlands, with CIBC World Market as the financial advisor.

The company has been suffering from the sharp depreciation of the rupiah since 1997, because its rupiah income is overburdened by U.S. dollar debt financing.

"In the third quarter of 1997, the depreciation of the rupiah and the ensuing economic crisis affected Ariawest's ability to service debt obligations," he said.

Ariawest is one of five companies set to build and operate telephone facilities under a joint-operation scheme with PT Telkom.

Under the scheme, Ariawest works as the exclusive partner of Telkom for services in West Java.

The company said it had exceeded its committed target of 29,000 phone lines, by constructing 324,000 new lines in West Java. It currently operates a network with over 570,000 revenue- producing lines and has a capacity to install 830,000 lines.

John Vondras, the president of the company, said in Bandung recently that the company is committed to further strengthening its investment in the telecommunications sector.

He said he hoped the government's plan to revise the joint- operation scheme with Telkom would benefit all interested parties, not only Telkom and its five partners, but also customers. (udi/43)