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.