Wicaksana gets $15 million debt haircut
JAKARTA (JP): Listed trading and distribution company PT Wicaksana Overseas International has managed to get some US$15 million in an overall debt haircut from its creditors after it signed a US$130 million debt restructuring agreement here on Friday.
"The restructuring deal includes a debt repurchase program, where the company will only pay 50 percent of the $27 million portion of the total loan," said Parveen Gandhi of Indo-Sing Business Advisory Pte. Ltd., a debt restructuring consultancy.
Another $55 million of the company's total debt will be rescheduled for a period of five years.
The company will repay $55 million in a lump sum by the end of the fifth year, starting from now, said Gandhi.
A $15 million portion of the total debt will be fully repaid after the yearly payment installments which will last for five years.
The company said it would pay $1.54 million in cash up front to one of the creditors that agreed to provide a five-year maturity bank guarantee amounting to $2.31 million.
The bank guarantee will be used by the company to support its day-to-day operations.
The company will have the $5.25 million loan portion transformed into five-year convertible bonds with a fixed interest rate of 6.5 percent per year.
This bond issuance is subject to the shareholders' approval at a planned meeting on May 17.
The company also promised to divest some of its noncore subsidiaries, worth $14 million, and sell all its idle fixed assets, valued at $3 million.
The remaining $9.35 million, the company said, would be converted into common shares through a rights issue slated to be held within the next 6 months.
If the existing shareholders did not exercise their rights share options, the creditors would take them by using the debt to equity format, according to Gandhi.
Gandhi said the debt restructuring agreement, which involved a $15 million principal payout as well as an interest payment haircut, would be effective from May 22, after the company held its shareholders' meeting.
"The company has pledged all its company's assets as part of the prerequisite of this debt restructuring," Gandhi said after the signing ceremony, which was attended by creditors and head of the Jakarta Initiative Task Force (JITF) Barcelius Ruru.
The company has debts with 21 foreign, joint venture and local creditors.
Its net profit last year stood at Rp 99 billion on net sales of Rp 2.6 trillion, compared to minus Rp 517 billion and Rp 1.8 trillion, respectively, the previous year.
The company attributed the net loss in 1998 to huge foreign exchange losses.
He said that with the applied assumptions in the debt restructuring agreement, which includes a sales growth of 25 percent, the company would only be able to tolerate a rupiah-U.S. dollar exchange rate up to 9,375.
A higher exchange rate would impede the company's ability to service its dollar debts.
Head of JITF Barcelius Ruru said the success of Wicaksana Overseas' debt restructuring would inspire others to follow suit.
He said JITF was now handling $7.6 billion worth of debts to restructured, $3 billion of which would be completed in June.
He said one of the companies involved in the above $3 billion was PT Riau Pulp.
The government established JITF in early 1998 to facilitate the restructuring of the country's corporate debts, including the large amount of overseas debts.
Indonesia's private sector overseas borrowing totals about $70 billion. (udi)