Polysindo not to make interest payments on notes

Polysindo not to make interest payments on notes

NEW YORK (Reuters): Polysindo Eka Perkasa will not make interest payments on over $600 million in outstanding Yankee debt issues, an official at the struggling Indonesian textile company told investors on Monday.

The prices of the company's three Yankee issues fell eight to 10 points in reaction to the announcement, which was made in a conference call to investors, a trader said.

The bonds fell to 24-28 from the mid to high 30s following the news.

Polysindo will be unable to make the interest payments because the Asian economic crisis has had a devastating impact on the company's financial position in recent months, said Steve Simpson, the company's financial advisor.

"You're all aware of the crisis we've experienced in Indonesia and the impact is clearly catastrophic," Simpson said during the conference call.

Polysindo will not make interest payments due June 15 on senior secured guaranteed notes due 2001 and 2006. The company said it will also not make payments due in late July on senior secured guaranteed notes due 2007.

One analyst said the semi-annual interest payments for the three Yankee bonds total around $35 million.

Simpson said Polysindo officials will visit the United States next week to appoint a financial advisor and to meet with lawyers as well as bondholder trustees.

Separately, the company also announced that it had successfully rolled over $127 million out of a total of $457 million in total short-term debt outstanding as of June of 1998, an analyst said.