Indofood appeals UK court ruling
Indofood appeals UK court ruling
Soraya Permatasari, Bloomberg/Jakarta
PT Indofood Sukses Makmur, the world's biggest maker of instant noodles, appealed a UK court ruling that rejected the company's plan to buy back US$154 million of bonds at their face value.
The Jakarta-based company submitted its notice of appeal against the Aug. 2 court ruling on Nov. 4, Djoko Wibowo, a director at Indofood, said in a telephone interview on Wednesday.
Indofood had planed to buy back at face value the outstanding $154 million out of $310 million in dollar-denominated bonds sold by its Mauritius-based unit, Indofood International Finance Ltd., before they mature in 2007.
The company wants to buy back the bonds to avoid paying higher taxes after the Indonesian government in January scrapped a tax treaty with Mauritius. The change doubled to 20 percent the withholding tax Indonesia deducts at source from the interest income on the bonds. Indofood is liable to pay for the increase because it agreed to pay investors a return net of tax.
Bondholders rejected a previous offer by Indofood to buy back the debt at a price higher than face value because it was still lower than the market price.
According to an agreement between the company and the trustee, JP Morgan Chase Bank NA, when the bonds were sold, any disputes will be settled through a British court.
Should a court decision on the appeal come late next year, Indofood may choose to cancel the buyback plan because that would be close to the maturity of the bonds, Wibowo said.
Indofood had $179.5 million of U.S.-dollar debt outstanding as of Sept. 30, including bonds sold by its Mauritius unit. As of Sept. 30, the company bought back $156.33 million of the unit's bonds, it said on Oct. 27.
Indofood sold the 10.375 percent bonds on June 11, 2002. The five-year debt maturing on June 8, 2007, was sold at a discount of 99.05 cents to the dollar, according to Bloomberg data at the time of pricing. The bonds were bid to yield 8.126 percent, according to Credit Suisse First Boston prices as of 10:18 a.m. in Jakarta.