Polysindo to complete restructuring

JAKARTA (JP): The country's largest integrated textile producer PT Polysindo Eka Perkasa, a member of the debt-ridden Texmaco Group, is hoping to finalize its debt restructuring program with the Indonesian Bank Restructuring Agency (IBRA) by year-end.

"The negotiations between the company and IBRA are still underway. I'm hoping we can achieve a debt settlement agreement by the end of the year," Tunaryo, the company's corporate secretary, said on Thursday.

He added that the ongoing negotiations were in line with the Master Restructuring Agreement (MRA) signed in May between the Texmaco Group and IBRA.

Under the MRA, the restructuring consists of three key points. First, the delay of debt principle repayments of up to eight years; second, a concession in the debt interest rate; and third, a debt-to-equity swap mechanism.

The company's debt per December last year stood at US$1.39 billion, of which $245 billion was owed to IBRA.

Polysindo finance manager Gopala Krishna said that the company would have to allocate more than $50 million to repay debt interest alone.

He added, however, that if the debt-to-equity swap system could be agreed, the debt would total only $900 billion.

"With that sum of money, and the assumption of a five percent interest rate, we'll only have to pay some $40 billion in debt interest next year," he said without elaborating further.

The Texmaco group, which is divided into textile and engineering divisions, owed around $3.08 billion to IBRA as of January this year and $1.65 billion to other creditors. (10)