Astra proposes debt restructuring

JAKARTA (JP): The country's largest automaker, PT Astra International, said on Friday that it had proposed a two-step program to its foreign creditors to restructure its US$2 billion of overseas debt.

The company said in a statement that the first step involved a debt repurchase program.

Astra president director Rini M. Soewandi said the company would seek to buy back $70 million in debt "through a Dutch auction".

In a Dutch auction the creditors bid to sell their debt in a system where the bidding gets lower and lower rather than higher and higher. However the company can cap the amount.

She said the $70 million was generated from the recent sale of Astra's micro-chip manufacturing unit.

"This is an offering to the creditors that have a short-term view, and would prefer to get out," Rini said, as quoted by Dow Jones Newswires.

Rini said that creditors which choose not to join the buy-back option, or fall outside the $70 million cap, would join the second part of Astra's debt plan.

The second part would split the remaining loan amounts into three separate tranches at a predetermined ratio.

The first tranche would be 14 percent of the original loan and would be with a three-year term, with quarterly interest payments and principal payments every six months. The first repayments would start two years after the signing of a restructuring program.

The largest part of the original outstanding debt, or 78 percent, would be extended to a six-year term, with a grace period of one year on interest payments and three years on payment of principal.

"And 8 percent of the loan would be converted into zero coupon bonds, with detachable warrants for eight years and a sinking fund," Rini said.

Astra told its creditors at a meeting in Singapore last month that it had stopped paying interest on about US$1.4 billion in group loans.

Multifinance firm PT BBL Dharmala Finance said on Friday that it had signed a standstill agreement with its foreign lenders to allow the firm to negotiate its debt payments.

"During the standstill period, BDF and its creditors will continue negotiations to restructure the company finances and to resume its normal operations," company president Sanjiv Chatrath said in a statement.

The company's foreign creditors include the Asian Development Bank (ADB), Commonwealth Development Corporation (CDC) of the UK, Germany's Investment and Development Company (DEG) and Krung Thai Bank Public Co., Ltd. (aly)