PT Astra's debt proposal meets creditors' approval

PT Astra's debt proposal meets creditors' approval

JAKARTA (JP): Local auto giant PT Astra International on
Friday reached agreement with its overseas bondholders on a
proposed US$1.1 billion debt-restructuring plan.

Astra said in a statement that it held three successive
bondholders' meetings in Singapore for three types of U.S.
dollar-denominated bonds totaling $450 million.

Bondholders voted overwhelmingly to accept the debt-
restructuring plan.

The vote came two weeks after Astra's bank creditors endorsed
the move. The strategy is being closely watched as a possible
benchmark for scores of Indonesian companies struggling to
survive under foreign debt burdens after the collapse of the
rupiah in 1997.

Bondholders failed to approve the plan at a meeting held in
late April. Because the last meeting did not have a quorum -- 75
percent of bondholders -- Friday's meeting only required 25
percent of bondholders present to form a quorum.

With this latest decision, Astra has reached agreement with
creditors on 99 percent of its total outstanding debt.

Astra president Rini M.S. Soewandi said she appreciated the
creditors and bondholders' approval on the company's debt
restructuring program.

"We are very grateful that our proposal received full support
from one of our stakeholders, our creditors, who have
continuously supported the success of the company.

"They believe in the company's long-term business growth and
recovery from the economic crisis plaguing the region, including
Indonesia in the near future," she said.

Rini said several holders of rupiah-denominated bonds failed
to show up at the meetings.

"It has been difficult to identify and locate these
bondholders due to fast and active trading of the bonds."

Nevertheless, Rini said the company would continue to strive
to contact all creditors, including holders of rupiah bonds, to
support its debt restructuring plan.

Astra, once one of Indonesia's most profitable and well-
managed conglomerates, was saddled with financial problems
following the fall of the rupiah in mid-1997.

Car sales, previously a core income earner, significantly
dropped in 1998, and are expected to decline further in 1999 as
Indonesia's economy remains stagnant.

Total Astra loans under the debt restructuring program,
including capitalized interest, are $1 billion and Rp 1 trillion,
about 60 percent of which are in the form of bank loans, both in
the U.S. dollar and rupiah, with the remaining in dollar and
rupiah-denominated bonds.

Under its restructuring plan, debt will be divided into three
tranches, with the first tranche totaling $200 million and Rp 235
billion (21 percent of the debts), the second tranche $647
million and Rp 760 billion (68 percent) and the third tranche
$100 million and Rp 117 billion (11 percent).

Astra offers a three year repayment period for the first
tranche, with full interest payments and a one-year grace period
of principal payments.

The second tranche has a six year repayment period, with a
six-month grace period for interest payments and a three-year
period of principal payments.

The third tranche comprises seven-year zero coupon loans or
bonds, with warrants. Astra plans to issue warrants that will be
converted into shares amounting to more than 10 percent of the
company's issued share capital.

With the debt restructuring plan now approved, Astra will
begin selling off subsidiaries and non-core assets to generate
funds to service interest payments. The company plans to sell off
assets worth Rp 3 trillion over three years to support the debt
restructuring plan. (rid)