Texmaco, up for sale, misses interest payment

Texmaco, up for sale, misses interest payment

Bloomberg, Jakarta

Texmaco Group, Indonesia's biggest textile maker, missed a payment on US$3.4 billion of debt due to a state agency that's trying to sell its stake in the group, a spokesman for the Indonesian Bank Restructuring Agency (IBRA) said.

Texmaco, which last year agreed to reorganize its Rp 29 trillion ($3.4 billion) debt to the agency, missed a Rp 139 billion interest payment due on Aug. 18, IBRA spokesman Raymond Van Beekum said, confirming an earlier report in the Koran Tempo newspaper. The company has 30 days to make the payment before it's declared in default.

The missed payment could overshadow a bank restructuring agency roadshow in London, Hong Kong, Singapore and Kuala Lumpur this week to spur investor interest in Texmaco, PT Bank Lippo and other Indonesian companies. The government is selling assets to recoup funds spent bailing out banks after the 1997-1998 Asian financial crisis, and to plug its budget deficit.

"It's a business that with the right balance sheet could be quite valuable," said Robert Appleby, Hong Kong-based chief investment officer of ADM Capital's Galleus Fund, which has about $120 million invested in Asian debt. "If properly managed and restructured it could be in good shape. But it's been off people's radar screens for a while now."

Appleby said he recently sold his holdings of Texmaco debt.

The bank agency last month failed in an attempt to sell Texmaco's debt and shares after Malaysia's Utara Capital Ltd., a group led by the eldest son of Malaysian Prime Minister Mahathir Mohamad, and China National Bluestar Corp., a state-owned enterprise, didn't submit final bids by the deadline. IBRA is also trying to sell its equity stake in the company.

Texmaco Group's spokeswoman Nina Kairupan did not return calls.

Texmaco owes a total of $3.4 billion to the bank restructuring agency. It also owes at least $1 billion to foreign bondholders, a debt that has not been restructured, including about $700 million owed by its main textile unit, PT Polysindo Eka Perkasa.

"If it fails (to make payment by) Sept. 18, all claims become due and payable," Van Beekum said.

Texmaco was founded by Marimutu Sinivasan, a businessman of Indian descent. Sinivasan was one of the few successful businessmen of the Suharto era who wasn't Indonesian-Chinese in background.

Texmaco's debt restructuring negotiations dragged on for several years after the Asian financial crisis, until it signed a debt rescheduling agreement with the Indonesian Bank Restructuring Agency in August of last year. The first interest payment under that agreement was scheduled for Aug. 18.