Barito to delay bond payment to July

Leony Aurora, The Jakarta Post, Jakarta

Plywood producer PT Barito Pacific Timber will postpone the payment of the overdue fourth coupon bond to July, so as not to disturb its working capital, the company's top executives say.

Speaking at a meeting on Wednesday, president director Juhannes Djalimin said the company would pay the January coupon worth Rp 33 billion (US$3.59 million) with the fifth payment in July, which is worth another Rp 33 billion.

"We'll pay the fine of an extra 1.5 percent interest," he said.

Barito's failure for payment was caused by the decline of the international plywood price in the fourth quarter of last year and a change in its export payment mechanism, he explained.

Unlike traditional customers like Japan, which execute a letter of credit (L/C) when the plywood reached the ship, a L/C used in exports to North African countries, such as Algeria and Libya, can only be executed after the goods have been received at the ports.

"There can be a delay of between one and two months," he said.

Juhannes said the company's cash flow was burdened with Rp 148 billion of amortization and coupon payments last year.

However, the company is optimistic that it will be able to meet obligations to bondholders in July, due to the already increasing price and the cash it will receive from its shipments in the last few months of 2004.

Barito issued Rp 400 billion in bonds in 1997, which were supposed to mature in 2002. However, the company restructured the bonds and postponed the maturity period to 2007.

In the first nine months of 2004, Barito booked a net loss of Rp 278 billion, down some 32 percent from the Rp 407 billion loss it recorded in the same period the previous year.

"The loss will possibly increase from the third quarter's figure," said Juhannes. The company forecasts a net profit of about $4 million by the end of this year.