Bakrie creditors approve $1.08 billion debt deal

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)