Astra International to repurchase its debt

Astra International to repurchase its debt

JAKARTA (JP): The country's largest automaker PT Astra
International announced on Friday that it would buy back US$1.17
billion in unsecured debt to its foreign creditors at 30 percent
of the face value.

The company said in a statement that it had $45 million in
funds for the buyback program.

"Astra's creditors have up to March 12 to participate in the
buyback program," the statement, a copy of which was made
available to The Jakarta Post said.

Last month the company offered to spend up to $45 million to
buy back the debt consisting of convertible bonds worth $125
million due 2006, $125 million due 2001, $200 million due 2003,
and Rp 400 billion due 2002 and "any non-trade indebtedness of
Astra International to its creditors and documented under
bilateral or syndicated banking facilities, inter-company loan
agreements or by promissory notes."

The company's public relations official Julian Warman said on
Friday that if the creditors' offers exceeded the $45 million
funds Astra has set aside for the debt buyback program, they
would be divided proportionately.

"All bids will be treated equally," he said pointing out that
there was no preferential treatment provided for early bids.

The Astra International Group, one of the best managed firms
in the country, said that it reserved the right to shorten or
extend the period of time during which indicative bids may be
submitted.

"The company has also the rights to amend the terms on which
indicative bids may be submitted and terminate or cancel the
invitation," the statement said.

Julian said that the program, which is voluntary, provides a
quick exit for creditors who want to make up losses and cut their
exposure in Indonesia.

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

Astra International, helped by its financial advisors Chase
Manhattan Asia Ltd., Sakura Merchant Bank Ltd., and Sumitomo Bank
Ltd.. told its creditors in October last year that it would stop
servicing interest payments until it reached an agreement with
creditors on restructuring its debt.

But some of its creditors, especially the Japanese banks,
opposed the company's plan to write off some of the debt before
reaching an accord to restructure it.

Negotiations with its foreign creditors stalled in December
last year when the Sanwa Bank-led consortium and Tokai Bank
refused to accept a suspension of interest payments.

The two banks, which Astra owes $200 million and $10 million
respectively, declared Astra in default and were demanding full
and immediate payment.

Astra International is one of many indebted Indonesian firms
having difficulties in repaying debts following the rupiah's
sharp deprecation by as much as 80 percent against the American
dollar in the past year.

The rupiah, which sank to its lowest level of 17,000 in
January last year, hovered around 8,700 on Friday against its
pre-crisis level of 2,450. (aly)