Texmaco units agree to $1.3b debt restructuring

Texmaco units agree to $1.3b debt restructuring

JAKARTA (Dow Jones): Indonesia's largest corporate debtor, the troubled Texmaco group, agreed in principle Friday to restructure US$1.3 billion in debt owed by two of its units to private and government lenders.

The restructuring of the two units - polyester producer PT Polysindo Eka Perkasa and textile concern PT Texmaco Jaya - follows a landmark $2.7 billion debt accord signed Sept. 30 between Texmaco's controlling shareholder, Marimutu Sinivasan, and the Indonesian Bank Restructuring Agency.

That accord depends on a successful workout of debt owed by the group's operational units, including $850 million in Yankee bonds issued during the 1990s by its flagship Polysindo.

In addition to agreeing to terms with Polysindo bondholders, Texmaco also agreed to restructure $450 million owed to IBRA by the two units as a creditor, said Brian Watkins, adviser to the Jakarta Initiative Taskforce, a state entity that mediated the debt workout.

This amount was excluded from the Sept. 30 accord in which Sinivasan agreed to surrender all group and family-owned assets to IBRA. In turn, the agency agreed to return those assets once their debts are repaid in full.

Terms of the Polysindo and Texmaco Jaya restructuring agreement weren't immediately available, but are expected to include a mixture of equity and new paper.

A third group of unsecured creditors who hold between $300 million and $500 million of Polysindo promissory notes weren't included in Friday's agreement, but will be invited into a final debt workout, Watkins said.