Newco to issue Rp 29t in bonds

The Jakarta Post, Jakarta

PT Newco, a holding company set up to restructure Texmaco Group's huge debts to the Indonesian Bank Restructuring Agency (IBRA), will issue exchangeable bonds as part of its debt payment scheme.

IBRA deputy chairman for Asset Management Credit (AMC) Mohammad Sjahrial said that the bonds, maturing in eleven years, would replace all the Group's debts, worth Rp 29 trillion (US$ 3.45 billion), in both principal and interest.

"As its debt payment to IBRA, it will issue exchangeable bonds, which start to mature in their eighth, ninth, tenth and eleventh years," Sjahrial said on Tuesday.

Coupon payment, however, would commence in the first year, with a yield to maturity of 7 percent for debts in dollars and 14 percent for rupiah debt.

The establishment of Newco was based on a ruling by the Financial Sector Policy Committee? (FSPC) in October 2000 in a bid to help restructure Texmaco's debts to the government.

FSPC groups together all economic ministers and oversees IBRA's sale of assets and debts restructuring worth more than Rp 1 trillion.

Newco is divided into two groups based on the group's core businesses.

Newco for Texmaco's textile business is called PT Bima Prima Perdana, with IBRA holding 75 percent of its shares, while the remainder are held by Texmaco. The second is Newco for engineering, called PT Jaya Perkasa Engineering, with all of its shares held by Texmaco.

Before the crisis, Texmaco was one of the country's largest conglomerates, with the government willing to provide credit facilities for further expansion.

However, the devastating crisis that struck in late 1990s left the company in difficulty over debt repayment.

Apart from its debt to IBRA, the Texmaco group owes also around $1.65 billion to other creditors.

Texmaco factories, including a 360,000-ton capacity purified terephtalic acid factory in Karawang, West Java, are located in several towns across Java.

Texmaco's engineering goods, such as textile machinery, machine tools, automobile components, fabrics and garments have entered markets in South Africa, Southeast Asia, the Middle East, Europe and the United States.