Bakrie unit seals debt deal with IBRA

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)