Creditors approve Danareksa debt restructuring

Creditors approve Danareksa debt restructuring

JAKARTA (JP): State-owned investment company PT Danareksa won
approval from its 60 creditors on Thursday to restructure its
US$196 million in foreign debt.

Danareksa executive Edgar Ekaputra said under the debt
restructuring agreement, the maturity period of $148.5 million of
the total debt, mostly in short-term promissory notes, was
extended to eight years, while the maturity period for the
remaining debt was extended to three years.

Previously, he said, the company repurchased a total of $136
million in promissory notes at an average discount of 49.5
percent.

Holders of the promissory notes were given the opportunity to
choose one of three alternatives, namely, debt buyback, three-
year medium-term debt conversion and eight-year long-term debt
conversion. The debt restructuring reduced Danakreksa's debt load
to $196 million from about $366 million previously.

Some 76 percent of the promissory note holders agreed to join
the eight-year debt conversion program, reflecting creditors'
confidence in Danareksa's management, Edgar said.

The three-year transferable loans will bear an average
interest rate of 0.75 percent above the London Inter Bank Offered
Rate (LIBOR), while the eight-year loans will carry an interest
rates of 2 percent above the LIBOR for the first three years and
up to 6 percent above the LIBOR for the last five years, he said.

Edgar said the restructuring did not involve local creditors,
who are owed a total of Rp 563 billion and $45 million.

"To make it fair between foreign and local creditors after the
restructuring, we have a pro rata payment covenant in the
restructuring deal," he said.

The covenant requires a pro rata payment to foreign creditors
with a ratio of $1 to Rp 2,900, meaning that for every one dollar
paid to foreign creditors, Danareksa has to pay Rp 2,900 to local
creditors.

Jusuf Anwar, the chairman of the private Jakarta Initiative
debt task force, said Danareksa's debt restructuring would help
stretch out debts, reducing the short-term pressure on
Indonesia's balance of payment.

"Danareksa is the 17th success story of the companies who
joined our agency for debt restructuring," he said without
disclosing the names of the other 16 companies, at their request.

Danareksa, established in 1976, signed the debt restructuring
deal with about 60 creditors, represented by a steering committee
which included Credit Suisse, First Boston, Daiwa Securities of
Japan and Kookmin Bank of South Korea.

Philip Lynch of Lehman Brothers, Danareksa's financial
adviser, said the deal was agreed to in principle in a record
time of less than 11 months.

He also said the restructuring did not involve any capital
injection or additional support from shareholders. (02)