Astra hopes to reach debt restructuring

Astra hopes to reach debt restructuring

Dow Jones, Jakarta

Car maker PT Astra International said Thursday it hopes to reach a debt restructuring agreement with creditors in October which will include a planned US$100 million rights issue.

The company will meet with its creditors next week in Singapore to discuss the debt workout, John Slack, Astra's finance director, told reporters.

Astra is under pressure to remain current on its $800 million foreign debt, which the company built up during overzealous expansion in the 1990s. The company has said it will only be able to muster enough funds to repay about half of the almost $200 million coming due this year.

A debt restructuring plan is likely to include the sale of assets as well as a rights issue, to raise cash.

The rights issue shares will total about 5 percent of the company's current total stock. According to first-half financial statements, Astra has a total of 2.6 billion shares.

The issuance of the rights shares is also aimed to strengthen Astra's long term capital-based growth," Slack said.

Astra is 32 percent owned by Singapore's Cycle & Carriage Ltd.

The company plans to sell part of its stake in PT Toyota Astra Motor - a 50-50 joint venture car manufacturing company with Japan's Toyota Motor - to raise cash under the debt restructuring.

Astra has said a deal by which Toyota Motor would take a 90 percent stake in its manufacturing operations in Indonesia is expected by the year-end, or early 2003.

Analysts expect the sale would likely fetch Astra some $200 million-$300 million - enough to pay a large chunk of its debt and stabilize its finances.

In August, the company sold a 74.56 percent stake in debt- ridden plywood producer PT Sumalindo Lestari Jaya for Rp 13.98 billion ($1.5 million) to unlisted PT Sumber Graha Sejahtera.

Astra's creditors include Isuzu Motors Asia Ltd., Marubeni Corp., Itochu Corp., and the Japan Bank for International Cooperation.