Ariawest International gets debt restructuring deal
Ariawest International gets debt restructuring deal
Dow Jones, Jakarta
PT Ariawest International has reached a debt-restructuring agreement, which likely will pave the way for state-owned telephone company PT Telekomunikasi Indonesia (Telkom), to buy out its joint-operating partner, an official with Telkom said on Monday.
Telkom's president Kristiono told reporters Ariawest, which is 35 percent owned by AT&T Corp., has signed a memorandum of understanding with its foreign creditors to roll over its debts to 2007 from its original maturity date in April 2002.
He, however, didn't provide further details.
Ariawest officials weren't immediately available for comment.
Telkom last year failed to close a US$370 million deal to buy out Ariawest, its foreign partner in a fixed-line project in West Java, as Ariawest failed to restructure its debts.
Telkom has said it would pay $184.5 million to buy 100 percent of Ariawest and assume its debt.
Telkom expected the final deal to cost between $360 million and $370 million, including Ariawest's debt.
Telkom is trying to reach agreements with a number of foreign telecommunications companies that set up fixed-line projects in the 1990s.
Telkom formed a joint operating partnership with Ariawest in 1995. Under that deal, Ariawest paid the state-owned company revenue in return for a 15-year monopoly in West Java.
But after the Asian financial crash of 1997, which pushed the exchange rate of the rupiah against the U.S. dollar sharply lower, many of the companies, including Ariawest, complained their revenues were barely enough to cover investment costs.
Indonesia's decision to open its telecommunication business to free competition also meant Telkom had to find a way out of its partnerships with foreign companies.
Of the five projects with foreigners, Telkom has already reached agreement to buy out three.
Elsewhere, Kristiono said that Telkom had yet to reach an agreement over acquisition price to takeover another joint- operating partner PT MGTI, which is developing fixed-line in the Central Java-Yoyakarta area.
MGTI is jointly owned by Telkom, PT Indosat, Telstra, and Japan's NTT.