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.