Tri Polyta hopes to restructure US$185 million in foreign debts

JAKARTA (JP): Publicly listed PT Tri Polyta Indonesia is upbeat its overseas bondholders will accept its debt restructuring proposal, given signs of recovery in its business performance.

"During the economic crisis, we were dragged down by a considerable foreign exchange loss, but now we are getting out of it and ready to restructure our debts," said investor relations executive Jeanne Watulo on Tuesday.

Jeanne said the format of the restructuring of the company's US$185 million debt with the overseas bondholders would be a combination of a debt principal reduction, rescheduling and a conversion of debts into equity through issuance of new shares.

She declined to elaborate on the progress of the debt restructuring negotiations, saying the company was bound by terms of a confidentiality agreement with bondholders.

"The progress is good and we will meet again with the bondholders within four weeks to six weeks from now," she said, adding that the meeting with the bondholders was first held in November last year.

According to Jeanne, Tri Polyta, which is listed on the Jakarta Stock Exchange and the New York Stock Exchange, issued the U.S. dollar-denominated bonds worth $185 million which issued in the U.S. in 1996. They were to mature in 2003.

The company failed to pay coupon payments to its bondholders on Dec. 1, 1999 and June 1, 1999, said Jeanne.

Bonds denominated in U.S. dollars, traded in the U.S. and issued by companies outside the U.S. are called Yankee bonds.

The market price of the company's Yankee bonds is currently 30 U.S. cents per dollar, or a 70 percent discount on the face value.

Asked about the debt reduction which would be offered to the company's bondholders, Jeanne said the amount would not refer to the bond market price.

"The bond market price will not be the reference of our debt reduction program," she said during the company's public expose at the Jakarta Stock Exchange.

Tri Polyta, with its production base in Cilegon, West Java, has a total capacity of 360,000 metric tons of polypropylene per year.

Polypropylene is plastic resin used as raw material for various packaging applications.

Sales and marketing director Didi Andries said most of the company's output went to overseas buyers. "We sell 80 percent of our products to the international market, while the remaining 20 percent is for the domestic market."

The company sold 225,076 metric tons of polypropylene in 1999, compared to 128,795 tons and 226,219 tons during 1998 and 1997 respectively.

Total polypropylene consumption in Indonesia in 1999, according to company data, was 464,000 tons. It compared to 403,000 tons, 527,000 tons and 476,000 tons in 1998, 1997 and 1996.

Didi projected a 15 percent increase in the domestic market consumption this year.

The market, however, continues to experience an oversupply due to the still weak domestic demand and the inflow of imported polypropylene at competing prices.

The current market price for polypropylene is $800 per ton.

"The market price is very fluctuational. It could go up and down by $200," he said.

With the current market price, the company could book a margin of about $205 per ton, compared to its highest margin of $500 per ton before the crisis.

"The margin continues to go down to today. It adjusts instantly to the going market demand and supply -- the factors which influence the price," she said.

Jeanne added the market price for polypropylene was also influenced by oil prices, which directly determined the price of the raw material for producing polypropylene.

The company booked net income of Rp 22.3 billion in 1999, as compared to a net loss of Rp 589.7 billion and a net loss of Rp 388.8 billion in 1998 and 1997 respectively.

The losses in 1998 and 1997 were due to huge foreign exchange losses of Rp 542.8 billion and Rp 342.4 billion respectively.

The company used an exchange rate of Rp 8,025 for 1998, and Rp 7,100 for 1999.

"We had a reversal of the previous year's foreign exchange loss, thus making a foreign exchange gain of Rp 136 billion in 1999, due to the strengthening of the rupiah against the dollar," Jeanne said.

The company's total assets stood at Rp 2.03 trillion as per Dec. 31, 1999, compared to Rp 2.06 trillion the previous year.

The company's shareholders as of the end of 1998 were PT Bima Kimia Citra (31.22 percent), Prajogo Pangestu (8.51 percent), Henry Pribadi (6.73 percent), Ibrahim Risjad (5.31 percent), Sudwikatmono (5.31 percent), other individuals (13.9 percent) and the investing public (29.02 percent). (udi)