Astra one step closer to debt solution

Astra one step closer to debt solution

JAKARTA (JP): PT Astra International, the country's largest
automotive firm, won approval from the majority of its
shareholders on Thursday to restructure US$946 million and Rp 900
billion ($101 million) in debt.

Shareholders also approved the board of directors' plan to use
part or all of the company's assets as collateral for existing or
future loans.

However, the Indonesian Bank Restructuring Agency, now the
firm's majority shareholder with a roughly 40 percent stake,
refused to support the debt-restructuring plan, Astra president
Rini M.S. Soewandi said.

"I'm sad after learning that IBRA abstained in the vote, while
our foreign shareholders approved our plan," she said.

IBRA assumed 10 percent ownership from Nusamba, which is
controlled by Mohamad "Bob" Hasan, 9.27 percent from Indo Artsa
Boga, part of the Salim Group, 9.25 percent from Gentala
Sanggrahan under Usman Atmadjaja, 7.16 percent from Delta Mustika
under Prayogo Pangestu and 1.16 percent from Gajah Tunggal Mulia
controlled by Sjamsul Nursalim.

The assets were ceded by their owners to IBRA after their
banks failed.

Despite IBRA's abstention, Rini said Astra would proceed with
its debt restructuring plan because it gained approval from the
majority of shareholders.

"We will meet with the creditors and hold a vote on the
restructuring plan on April 21," she said after the company's
extraordinary shareholders meeting.

Voting will be based on Indonesia's bankruptcy law guidelines.
They stipulate at least half of the company's creditors must
participate in the vote and the voting decision must be supported
by creditors representing two-thirds of the total outstanding
debt.

"We hope to get approval of the majority of our creditors,"
she said.

She acknowledged that creditors and bondholders were cool to
Astra's recent debt buyback offer. The company bought back just
$24.3 million of unsecured debt, well below its $150 million
target.

Analysts attributed the low turnout to the company's offer to
pay only 30 cents per U.S. dollar for the unsecured debt.

"From one side, I'm sad. But from the other, I feel the
results are positive because this shows that our creditors want
to remain with us," Rini said.

She noted the debt buyback program cost Astra $7.5 million,
far shy of the $45 million the company allocated. The remaining
$37.5 million will be used to help make resumed interest payments
if creditors agree with the company's plan.

If the majority of creditors approve, Rini said, Astra hoped
to sign definitive agreements with them by the end of June.
Interest payments, frozen since last year, would resume in July.

Rini said there was now $62.5 million cash in hand for
interest payments.

According to the plan, all remaining debt will be divided into
three tranches.

The first tranche would total $200 million and Rp 235 billion
(21 percent of the debt), and the second tranche $647 million and
Rp 760 billion (68 percent). The final tranche would consist of
$100 million and Rp 117 billion (11 percent).

Astra is proposing a three-year repayment period for the first
tranche, with full interest payments and a one-year grace period
on principal payment.

The second tranche has a six-year repayment period, with a
six-month grace period on interest payments and three-year period
of principal payment.

The third tranche consists of seven-year zero coupon loans or
bonds, with warrants. Astra plans to issue warrants that will
convert into shares amounting to more than 10 percent of the
company's issued share capital.

Shareholders also authorized the board to issue new shares of
up to 25 percent of Astra's outstanding share capital without
proceeding through the rights issue process. The price of the new
shares will at least be Rp 1,200.

Astra shares rose Rp 125 to close at Rp 900 on Thursday.
(02/rid)