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)