Bakrie unit seals debt deal with IBRA
JAKARTA (JP): PT Seamless Pipe Indonesia Jaya (SPIJ) of the Bakrie Group has entered into an agreement with the Indonesian Bank Restructuring Agency (IBRA) and the Asian Development Bank (ADB) to restructure its debt totaling US$140 million and Rp 561 billion (US$78 million).
IBRA said in a statement on Thursday that the debt restructuring would be conducted through a combination of debt to equity swap, conversion into convertible bonds and stretching the maturity of the remaining debt.
IBRA said the agreement would affect all of SPIJ's debt to the agency totaling $113 million and Rp 101 billion; to ADB and a consortium of offshore banks, $27 million, and to parent company PT Bakrie & Brothers, Rp 461 billion, as well as the $58 million the company owes in interest payments to IBRA and an ADB syndication.
Of the total debt, 50 percent of institutional debt or $77 million would be converted into equity, 20 percent of the institutional debt or $31 million would be changed into convertible bonds and the remaining 30 percent of the institutional loans would be extended in its repayment schedule.
In addition, all the company's debt to shareholders totaling Rp 461 billion would be converted into equity.
"SPIJ is the first Indonesian company that has negotiated an agreement to restructure debts involving the ADB," IBRA said in the statement.
As part of the restructuring, parent company Bakrie & Brothers said it had agreed to merge its PT Southeast Asia Pipe Industries (SEAPI) operations into SPIJ "to become a much larger pipe manufacturer and make the operations more profitable and provide an exit route for IBRA and ADB syndicate."
The merger, however, will be subject to necessary approvals from appropriate authorities.
Earlier, PT Bakrie Nirwana Resort, another unit of the Bakrie Group, reached an agreement with IBRA to restructure its debt totaling $161 million and Rp 40 billion, with a similar restructuring scheme as that applied to SPIJ.
Upon the completion of SPIJ debt restructuring, the Bakrie Group has thus far restructured 47.6 percent of its total obligation to IBRA, which according to IBRA report as of Dec. 6 totaled Rp 4.3 trillion.
Thus, the Bakrie Group's cumulative debt to IBRA should shrink to $273 million and Rp 140 billion. (rid)