Wed, 29 Nov 2000

Bakrie creditors approve $1.08 billion debt deal

JAKARTA (JP): Creditors of publicly listed business group PT Bakrie & Brothers approved the company's US$1.08 billion debt restructuring proposal during a vote held by the Central Jakarta Commercial Court, Bakrie said on Tuesday.

Bakrie spokesman Lalu Mara Satria Wangsa said the majority of its creditors, representing 91.4 percent or $965.24 million of the company's total debt, had voted in favor for the debt restructuring proposal.

Only two creditors, representing $14.39 million in debts, had voted against the proposal, while six creditors with $26.52 million in debts abstained, he said.

"We have finally completed the restructuring of our debts of $1.08 billion, under an exchange of debt for equity deal," Mara said in a media statement.

Ninety percent of the holding company's debts are foreign debts, with the remaining 10 percent comprising debts from local banks, including debts transferred to the Indonesian Bank Restructuring Agency (IBRA).

The group's creditors include Amex Singapore, Cariploe Singapore, Chase Manhattan Singapore, Deutsche Bank, Dresdner Ltd., IBJ Leasing, Hitochu Corp., The Law Debenture Trust and Westdeutsche Landes Bank Girozentrale.

Mara said under the debt restructuring strategy, the company would surrender 95 percent of its stake to creditors.

Banks will own a stake in Bakrie through a special purpose vehicle, which the company planned to form.

"As banks do not own companies, we will form a special purpose vehicle to accommodate their stake in us," he said.

Through its implementation, creditors will also own a 52.4 percent stake in PT Bakrie Sumatra Plantations, 20 percent stake in coal-mining firm PT Arutmin Indonesia and a 70 percent stake in electronics company PT Bakrie Electronics Company.

Mara said the Bakrie family, which founded the holding company, and the public would own only five percent of the company.

"We must admit that the exchange of debt for equity deal causes the ownership of existing shareholders to dilute significantly," he said.

However, he added, the deal was deemed as providing the best solution.

Bakrie began negotiating for a debt restructuring plan since 1997, but had never reached 100 percent creditor approval in order for the debt restructuring deal to become effective.

Mara said an earlier vote in May 2000 ended with only 76 percent strong support.

As some creditors rejected the deal, Bakrie last month appealed for the suspension of its debt payment at the Jakarta Commercial Court in a move that would allow it to negotiate debt restructuring under the court's supervision.

Based on the 1998 Bankruptcy Law, Bakrie needs only to secure the vote of two-thirds of its creditors to go ahead with a debt restructuring plan.

The company said earlier that the court had granted its appeal to suspend the debt payment, thus giving way for the finalization of its debt negotiation process.

"The discussion of the proposal was conducted transparently under the supervision of the commercial court," Mara said.

He said that prior to the vote, the court had also verified the exact amount of Bakrie's debt.

"The latest vote reveals a significant increase in support over the company's debt restructuring proposal," he said. (bkm)