Tire maker eases debts

Tire maker eases debts

Dow Jones, Jakarta

Indonesian listed tire maker PT Gajah Tunggal said Monday that it has reached an agreement with foreign creditors to restructure US$528 million in debts.

Gajah Tunggal added it has settled $208 million of the total debts at a discount, although it declined to mention what that discount was.

The remaining $320 million will be paid in six-years time. For this purpose, Gajah Tunggal, Southeast Asia's largest tire maker, will issue six-year floating rate notes to its creditors amounting to $320 million.

The notes will carry interest rates ranging from two-to-three percentage points above the three-month Singapore interbank offered rate, or Sibor.

The debts originally matured in 1999 but the company was unable to repay them due mainly to the rupiah's sharp fall against the dollar and the high interest rates on that debt, the company said.

The company's creditors include the Jakarta branch of ABN Amro Bank, the Singapore branch of Germany's Bayerische Hypo-und Vereinsbank and the Jakarta branch of JP Morgan Chase Bank.

The company was founded by Sjamsul Nursalim, a businessman who after the 1997 Asian financial crisis pledged the company and other assets to the government to settle his debts of Rp 27.4 trillion ($3 billion).

Gajah Tunggal's shares on the Jakarta Stock Exchange rose Rp 10 to Rp 220 Monday.