PT Astra International to resume debt repayments

PT Astra International to resume debt repayments

SINGAPORE (Dow Jones): Indonesia's PT Astra International
plans to resume interest rate payments on US$1.1 billion in debt
starting in July, company President Rini Soewandi said on Friday.

Astra's decision to resume payment follows a poor reception to
a buyback offer last month for some of its unsecured outstanding
debt.

Rini said that debt restructuring negotiations with creditors
are going smoothly and that plans to collateralize Astra's assets
by April 21 are underway.

"The buyback offer went very poorly as many creditors expect
any restructuring of the debt to offer a better return than the
30 percent we were offering," Rini said.

As part of the restructuring plan, Astra had offered to spend
up to $45 million to pay back some of the company's $1.1 billion
in unsecured debt. The offer closed March 12.

Astra and creditors are meeting in Singapore to fine-tune the
restructuring negotiations, which include efforts to rescind the
company's call option on any outstanding zero-coupon bonds and at
the same time give bondholders the right to detach warrants
immediately.

Rini also said assets sales, however small they may be, are
ongoing, to show the company's intent on repaying its outstanding
debt.

Astra shocked its bankers last year by halting interest
payments on $1.1 billion of its $2 billion debt.

Following the Singapore creditors' meeting Friday, Rini said
creditors appear content with how ongoing negotiations are
proceeding. Another meeting is scheduled for domestic and
European creditors Monday in Jakarta.

That's just three days before a March 25 emergency
shareholders' meeting in Jakarta, when Astra directors will seek
approval to collateralize company assets that currently feature a
negative pledge, meaning they are frozen, Rini said.

If and when Astra's assets are collateralized, company cash
flow and the sale of any assets will be used to pay debt, she
added.

"The one-on-one meetings with the larger creditors now becomes
the more important focus, as each will want to tailor any
agreement to fit specific demands," she said.

Rini added that she plans to travel to Tokyo and Europe to
meet with creditors before the planned April 21 deadline for
finalizing the company's debt restructuring process.

Last month, Astra told creditors that it would adopt
Indonesia's bankruptcy law guidelines for reaching agreement on
any restructuring process.

Under the proposal, 50 percent of Astra's creditors -- who also
represent two-thirds of the outstanding debt -- must be present at
a meeting for any agreement to be finalized.

Since then, Astra debt has been "traded heavily" in the
secondary market, Rini said, with a number of creditors settling
for "large discounts." Those buying the debt are no doubt hoping
ongoing debt restructuring plans will provide increased returns,
she said.