Market awaits Astra's debt solution
Market awaits Astra's debt solution
JAKARTA (JP): Analysts have welcomed PT Astra International's
plan to restructure its US$1 billion in debt, saying it could set
a positive precedent for corporate debt restructuring in the
country.
Any delay or failure in Astra's debt restructuring plan would
complicate debt solution not only for Astra but also for other
companies, they warned.
The approval by Astra's shareholders last week of the
company's debt restructuring plan should smooth the way toward a
debt solution for the company, they said.
"We are pleased with this progress. This sends a good signal
to the market that Astra could get through this process," the
associate director and head of equity sales at Bahana, Andre
Cita, said on Friday.
Astra earlier said that after getting approval from
shareholders, it would meet creditors this week to present them a
comprehensive debt restructuring proposal and then hold a vote on
the restructuring plan on April 21.
Under the company's restructuring plan, debt totaling some $1
billion would be divided into three tranches, with the first
tranche totaling $200 million and Rp 235 billion (21 percent of
debt); the second tranche would total $647 million and Rp 760
billion (68 percent of debt); and the third tranche would total
$100 million and Rp 117 billion (11 percent of debt).
The plan calls for a three-year repayment period for the first
tranche, with full interest payment and a one-year grace period
on the principal payment.
The second tranche would have a six-year repayment period,
with a six-month grace period on the interest payment and a
three-year grace period on the principal payment.
The third tranche would comprise seven-year zero coupon loans
or bonds with warrants. Astra would issue warrants which would
convert into shares amounting to more than 10 percent of the
company's issued share capital.
Apart from this restructuring plan, Astra earlier held a debt
buyback which attracted only $24.3 million of unsecured debt.
Astra president Rini M.S. Soewandi said she was confident
most of the creditors would approve the company's restructuring
plan.
If the plan is approved, some analysts said, Astra would
become the first of Indonesia's troubled corporate giants to
succeed in overall debt restructuring.
"If Astra -- one of the blue chips on the Jakarta Stock
Exchange -- fails in its debt restructuring, I cannot imagine
what will happen to other troubled listed companies," one analyst
at a local securities house said.
"Therefore, Astra's debt restructuring plan must not fail. It
must be successful because it will become the barometer for our
corporate debt restructuring."
Another analyst, however, expressed skepticism over the plan.
Head of research at BNI Securities, Adrian Rusmana, said the
package would not be attractive to creditors.
Regarding the company's plan to issue new shares worth up to
25 percent of issued share capital, Adrian suspected Astra would
offer a debt-to-equity deal to creditors.
If the amount of new shares covers the $1 billion debt, it
definitely would be unattractive to creditors, he said.
The plan also would affect minority shareholders because the
new shares issue, together with the planned warrants issue, would
cause a 35 percent delusion in ownership, he said.
Astra shareholders, however, set the price of the new shares
at a minimum of Rp 1,200.
Astra shares fell back to Rp 800 on Friday after surging by Rp
125 to Rp 900 on Thursday.
Rini said, however, that Astra had no immediate plan to issue
new shares.
"It's only an authorization from shareholders to issue new
shares if there is a need. For example, for the purpose of a
debt-to-equity conversion requested by creditors."
However, she added no creditors had asked for a debt-to-equity
swap during debt restructuring talks.
Rini maintained the debt restructuring plan would not require
creditors to write off their debt, and she asserted creditors
would be paid back in seven years.
Astra will sell up to Rp 3 trillion worth of assets in three
years to support its debt restructuring plan, Rini said. However,
if Astra's operation improves significantly within this period,
enabling it to service its restructured debt, Astra will not
continue selling its assets.
Rini said the company had $62.5 million cash on hand for
interest payments, expected to resume in July if creditors agree
to Astra's proposal.
"If the deal happens, this will give us more time to settle
our obligations and also to improve our performance so Astra will
not only be strong in the domestic market but also capable of
entering the international market."
"We also hope our debt restructuring plan, if we can achieve
it, will encourage corporate restructuring in general, especially
in the real sector." (rid)