Newco to issue Rp 29t in bonds

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.