Federal Motors is seeking debt delay

Federal Motors is seeking debt delay

SINGAPORE (Dow Jones): Indonesia's PT Federal Motors, the main motorcycle-producing unit of giant conglomerate PT Astra International, is seeking to have debt payments falling due this year extended for three years, a company director said Wednesday.

Speaking to Dow Jones Newswires after a meeting with the unit's creditors, Himawan Tossin said the company was seeking "flexibility" from bankers in terms of retaining some cash flow.

"We want some flexibility in having our cash because of foreign currency volatility," Himawan said, adding that the company needed cash to pay for its imports.

Astra International, one of the most widely held stocks on the Jakarta Stock Exchange, last month halted interest payments its own debt and that of some of its units saying it couldn't afford to pay the interest. Astra and its units are negotiating with their banks to reach debt restructuring agreements.

Federal Motors is still paying interest on its debt.

Himawan said Federal Motors wants debt falling due this year to be extended for three years. He said the company was also seeking a commitment from banks that there would be a long-term lending facility available to it.

Himawan, who is a member of Federal Motors' board, said it was "difficult to guess (banks') impressions," on its debt restructuring proposal.

He declined to give the amount of Federal Motors' total debt.

Astra Graphia is due to meet its creditors Thursday in Singapore while Astra International will meet its bankers later in the month, also in Singapore.

Many of Astra's former core units -- such as Federal Motors -- have been devastated by the crisis rocking Indonesia's economy. As well as having to grapple with mountains of foreign debt, the companies have also seen the bottom fall out of their core automobile business.

The other Astra companies not paying interest on debt are: PT Lintas Adhikrida, PT Non-Ferindo Utama Aluminum Alloy, PT Fuji Technica Indonesia, PT Berau Coal, PT Pandu Dayatama Patria and PT United Tractors Pandu Engineering.

As well as Federal Motors, Astra affiliates that can continue paying their debts on schedule are: PT Astra Argo Lestari, a listed palm oil producer and PT Toyota Astra Motors, a joint venture with Toyota Motor Corp. to produce vehicles.

Ciputra bonds

Meanwhile, Indonesian real estate developer, PT Ciputra Development said on Wednesday it has reached agreement to restructure Rp 450 billion in bonds, marking the first time an Indonesian company has managed to successfully do so.

The deal was achieved after nine months of negotiations.

The bond restructuring, however, is just the beginning for Ciputra which has mountains of unhedged foreign debt. The company still has another $305 million and Rp 780 billion debt.

Ciputra's Finance Director Harun Hajadi said under the unusual plan to restructure the bonds, Ciputra will list a unit on the Jakarta Stock Exchange in order to change the bonds into shares, but without an initial public offering -- marking another first.

The agreement shows that some Indonesian companies -- saddled with billions of dollars in debt -- are coming up with innovative ways of restructuring payments.

Initially the rupiah bondholders were reluctant to agree to the deal. "This is really the first time they've done a major restructuring," Hajadi said. "Let's say if you propose something very creative ... usually in the beginning they always say no."

The bondholders finally agreed a month ago, and by December 31, Hajadi said they will own 56 percent of Surabaya-based property company PT Ciputra Surya.

The original bonds -- one issue of Rp 150 billion maturing in 2001, and one of Rp 300 billion maturing in 2003 - will be replaced by a zero coupon bond maturing in 2003. And the lost interest yields will be replaced by shares in Ciputra Surya with a 31 percent discount on the net asset value of the company.

By expanding the shareholders to over 300, Ciputra Surya will be considered a public company and be able to list without an initial public offering, Hajadi said. The shares will be listed at a share price of Rp 500, pending approval from the capital market regulatory body, Bapepam.