Astra proposes debt restructuring

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)