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)