Three firms progress in debt restructuring

Three firms progress in debt restructuring

JAKARTA (JP): PT Bakrie & Brothers, PT Polysindo Eka Perkasa
and PT Mulia Industrindo announced on Monday significant progress
in restructuring their foreign debts totaling more than US$3.1
billion.

Bakrie said it reached an agreement in principle with its
creditors to restructure its $1.02 billion debt through a
debt-to-equity swap scheme. It hopes to clinch a final deal in
August.

Polysindo, Indonesia's largest integrated polyester
manufacture, said it was in the final stages of preparing a
comprehensive restructuring proposal for its $1.4 billion debt,
with a final agreement expected by August.

Mulia Industrindo, according to Dow Jones Newswires, has
clinched an agreement in principle with its creditors to
restructure its $550 million debt.

"The debt restructuring process involves the establishment of
a master special purpose vehicle which will own 80 percent of
Bakrie shareholdings in five companies," Bakrie president Iwan
Sjarkawi told reporters.

The Bakrie shareholdings are the 2.2 percent stake in the New
York-listed satellite phone network Iridium LLC, 20 percent stake
in PT Arutmin Indonesia, 25.49 percent stake in PT Bakrie Kaisei
Corp., 70 percent stake in PT Bakrie Electronics Company and 52.4
percent stake in PT Bakrie Sumatra Plantations.

In addition, he added, the special purpose vehicle, to be 80
percent controlled by creditors, also will own 30 percent of
Bakrie through the issuance of new shares on a fully diluted
basis.

After the dilution, the Bakrie family will lose control of the
Bakrie & Bros group, with its equity stake falling from almost 51
percent to 17.45 percent, Sjarkawi added.

He said 69 percent of the total creditors voted on the
restructuring proposal in Singapore on April 20, with 73 percent
of them responding positively to the debt-equity swap concept.

"The voting process was witnessed by the Jakarta Initiative
Task Force for the benefit of all the lenders in general and the
Law Debentures Trustees Ltd. of the United Kingdom as the
trustees of the holders of certain debt instruments of Bakrie,"
Sjarkawi added.

Analysts welcomed the debt-restructuring progress as a strong
signal of increasing foreign investor confidence in the country
and an evidence of more Indonesian debtors working in good faith
to resolve their debt problem.

They see the resolution of the private sector's foreign debts,
estimated at around $80 billion, including those owed by banks,
as quite crucial for restoring bank lending to the business
sector.

State-owned financial service company PT Danareksa last week
broke the stalemate in the debt resolution through what analysts
called a landmark deal.

Danareksa concluded the first major foreign debt restructuring
agreement last Thursday, involving $196 million in promissory
notes, since the country's economic crisis began.

Polysindo

Polysindo's chief financial officer M.Gopalakrishnan said
separately that the company, along with its financial advisers
Donaldson, Lufkin & Jenrette Asia Ltd., and with the guidance of
the Jakarta Initiative Task Force, was finalizing its debt
restructuring proposal.

"We are making every effort to expedite an inherently
difficult and arduous process which normally takes several
months, even in developed countries," Gopalakrishnan said, adding
that the final proposal was expected by August.

He noted that while the polyester industry worldwide continues
to reel under a severe price downturn, Polysindo has been able to
operate its manufacturing facilities at 50 percent to 55 percent
capacity utilization levels.

"We have been successful in achieving a 50 percent export
content in our current sales turnover but at substantially
reduced margin levels," he said.

Polysindo's finance director P. Manohar added that with no new
major polyester capacities coming up in the near future and
inventories drying up fast, the firm expected prices to improve
considerably.

"This should enable Polysindo to report better earnings,"
Manohar said.

Publicly listed Polysindo and its subsidiaries have often been
rewarded by the government as one of Indonesia's largest
exporters of textile and garments.

PT Mulia Industrindo -- a parent company of PT Muliaglass, PT
Muliakeramik and Mulia Finance BV -- also announced that it had
received creditors' approval on its debt restructuring, split
into two tranches amounting respectively to $440 million and $110
million.

The $440 million tranche will be converted into an eight-year
loan with step-up interest rate features, the company said.

The second tranche will be converted into a loan that can be
repaid on an irregular basis in the next eight years whenever the
company has excess cash, it added.

Meanwhile, informed sources said PT Astra International would
most likely strike a final restructuring deal on its $1 billion
debt later this week. (02)