Astra to raise asset sales to replay debt

JAKARTA (JP): Publicly-listed automotive giant PT Astra International, seeking to raise Rp 3 trillion (US$340 million), plans to sell off more assets in order to improve its capacity to repay debt.

Astra finance director Dorys Herlambang said here on Tuesday that these sales would include the divestment of ownership in a number of subsidiaries.

She declined to name them but indicated that they would be in the manufacturing sector.

"After the sales, Astra's core businesses will remain in the automotive and resource-based sectors," she told journalists at his office.

"We will continue to strengthen domestic retailing in the automotive business... We will also continue to take part in auto manufacturing, but will not look down at the role of our partners in terms of technology and export capabilities."

Late last year, Astra relinquished 25 percent stake at PT Astra Daihatsu Motor to its Japanese partners, reducing its ownership at the company to 50 percent.

Dorys said the proceeds from asset sales would be used to repay the company's mounting debt.

Astra International, Indonesia's largest automobile producer with sizable stakes in diverse sectors, including agro-industry, has a non-consolidated total of $1 billion in foreign-debt obligations and a local currency debt of Rp 1 trillion -- equivalent to $1.17 billion, based on an exchange rate of Rp 10,700 to the dollar, as quoted by Bank Indonesia on Sept. 30.

Astra has offered to buy back $1.17 billion in unsecured debts to its foreign creditors at 30 percent of the face value and has set aside $45 million for the buyback program.

Dorys said the company has presented a new proposal to creditors in a bid to reach an agreement and move its debt restructuring process along.

The proposal includes an upfront payment equivalent to three months interest to investors.

The upfront interest payments will be disbursed at certain milestones whereby 25 percent of the total will be paid after the debt buyback program is finished, another 25 percent when the commercial terms are agreed and the remaining 50 percent at the closing of the process.

The proposal offers three basic facilities. Facility one covers some $100 million in three-year debt, accounting for 14 percent of the total to be restructured. Astra proposes to increase debt in this category to 26 percent of the total.

Facility two covers six-year bonds with a one-year grace period. This facility covers some 60 percent of the total debt.

Facility three covers some $90 million eight-year, zero-coupon bonds, with a detachable warrant and sinking fund. Astra is offering to shorten the maturity period to seven years.

Dorys said Astra hoped to nail down a deal with most of its creditors by April 21.

"Of course, we have to do it through a kind of voting system because Astra has so many creditors," Dorys said.

Under the prevailing laws, she said, Astra would need approval from at least half the creditors, representing at least two- thirds of the total debt, to go ahead with its proposal. (rid)