Indofood plans to buy back bonds

The Jakarta Post, Jakarta

A unit of publicly listed instant-noodle maker PT Indofood Sukses Makmur is seeking to redeem US$280 million in bonds it issued in 2002, in an effort to reduce tax payments on the debt.

Indofood International Finance Ltd., a wholly owned subsidiary of Indofood located in Mauritius, will present the buy-back plan at a bondholders' meeting on Dec. 23, parent company president Anthony Salim said in a media statement.

The company sold the bonds on June 11, 2002 at a discount price of 99.05 cents to the dollar, Bloomberg data showed.

At the upcoming meeting however, Indofood will offer to pay at 102 cent to the dollar, plus the interest from Dec. 18 to Jan. 6 2005, the statement added.

The redemption plan comes in light of the government's plans to cancel a tax treaty with Mauritius and increase the tax on the island-based bonds to about 20 percent starting January next year, from the current 10 percent.

Should the Dec. 23 meeting come to no avail, another meeting is expected to be held on Jan. 7.

By that time, the company would offer a buy-back price at 101 cent to the dollar, together with interest accrued from Dec. 18 to Jan. 12.

If Indofood fails to get bondholders' approval to repurchase the debt at the offered prices, the company "will proceed to ask the English Court for a declaration that it is entitled to redeem the bonds at par."

Indofood's foreign-currency debt is rated B2 by Moody's Investors Service and B by Standard & Poor's.