Bakrie to complete debt restructuring in September
JAKARTA (JP): The widely diversified PT Bakrie & Brothers is set to complete the restructuring of its US$1.02 billion debt in September this year, the business group's top executive said here on Thursday.
Company president Irwan Sjarkawi said auditors were now in the final stages of the due diligence on the proposed debt-to-equity swap.
"The auditors are still working hard on the due diligence. We are expecting it to be finalized in the next three to four weeks," he said following the business group's shareholders meeting.
The company earlier announced it had reached an agreement in principle with its creditors to restructure its debt through a debt-to-equity swap.
The restructuring involves the establishment of a Master Special Purpose Vehicle company, through which creditors will take over 80 percent of Bakrie & Brothers' shares in five of its subsidiaries.
In addition, this new company will own 30 percent of Bakrie & Brothers through the issuance of new shares on a fully diluted basis.
The main aim of the debt restructuring is to ensure the company's assets are not sold in the current depressed market, Sjarkawi said.
He said eight of Bakrie's subsidiaries, including PT Bakrie Pipe Industries, PT Southeast Asia Pipe Industries, PT Seamless Pipe Indonesia Jaya, publicly listed PT Bakrie Sumatera Plantations, PT Bakrie Tosanjaya, PT Bakrie Building Industries and PT Bakrie Corrugated Metal Industries, were currently undergoing debt restructuring.
He said both Bakrie and its subsidiaries' debts, amounting to around $570 billion and $500 billion, respectively, should immediately be restructured to enable the company to continue its operations and enhance its future performance with a sustainable level of debt.
"Bakrie & Brothers' debt will be zero after the finalization of the debt restructuring, meaning that the company will then be ready to begin in a much better condition," he said.
He said the company was upbeat its debt restructuring program would proceed smoothly.
Sjarkawi said Bakrie ended 1998 with a consolidated net loss of Rp 2.18 trillion, compared to a net loss of Rp 283.9 billion in 1997.
"The 1998 deficit was due mainly to a substantial increase in foreign currency losses along with a consequent rise in net interest costs," he said.
He said losses resulting from the weaker rupiah jumped to Rp 2.08 trillion in 1998 from Rp 53.1 billion in 1997, while net interest expenses surged to Rp 849.9 billion last year from Rp 105.4 billion in 1997.
The shareholders approved during the meeting the group's proposal not to pay dividends for the 1998 financial year due to the company's losses.
However, Bakrie reported the company's consolidated revenue increased by 79 percent in 1998 to Rp 3.52 trillion from Rp 1.96 trillion in 1997.
Of the total revenue, the company's agribusiness contributed 60.2 percent (Rp 2.13 trillion), followed by infrastructure support with 27.4 percent (Rp 971.9 billion) and telecommunications with 12.4 percent (Rp 439.4 billion).
Agribusiness experienced the highest increase in revenue, rising around 159 percent from the Rp 825 billion booked in 1997.
The increase was the result of improved sales volume by the Lewis & Peat group of trading companies and by Bakrie's oil palm subsidiaries.
The company's telecommunications business saw its revenue decline by 5 percent last year from Rp 462.4 billion in 1997.
The drop was mainly caused by a decrease in sales of its fixed wireless business under PT Radio Telepon Indonesia (Ratelindo), whose revenue fell to Rp 81.5 billion last year from Rp 104.1 billion in 1997. (cst)