Bakrie’s loan maturity period extended

Ika Krismantari ,  The Jakarta Post ,  JAKARTA   |  Thu, 04/23/2009 11:40 AM  |  Business

PT Bakrie and Brothers, controlled by the powerful family of Coordinating Minister for the People’s Welfare Aburizal Bakrie, has proven unbeatable when it comes to beating a debt trap.

The company has extended the period of its loan maturity under a debt restructuring scheme it secured with Seychelles-based Piper, Price and Company (PPC), the representative of Northstar Pacific, which has taken over Bakrie’s debts to Odickson Finance.

Under the deal, signed on Jan. 17, Bakrie extended the payment period of its Rp 4.26 trillion loan to January 2012, said Bakrie corporate secretary R.A. Sri Dharmayanti, in a statement sent Wednesday to the Indonesia Stock Exchange (IDX).

The loan should have matured on April 21.

Under the agreement, the payment will be divided into two tranches, with the first valued at Rp 1.160 trillion to mature on Jan. 20, 2012, with an annual interest rate of 15 percent flat.

The agreement states Bakrie can pay this loan either in cash or by issuing new shares (rights issue).

For the second tranche, the company will issue debt notes worth Rp 3.1 trillion.

The first notes, called series A, will have a total value of Rp 31 billion, with maturity on April 30, series B worth Rp 279 billion to mature on Sept. 25, 2009, and series C worth Rp 2.79 trillion to mature on Jan. 20, 2012.

While the first and second notes carry zero percent interest rate, the series C notes will carry an annual interest rate of 19 percent.

Moreover, the agreement notes that series B and C can be changed to other debt instruments.

All in all, should Bakrie decide to change the series B notes into other debt instruments, it will only have to pay Rp 31 billion in debt repayments this year.

It remains unclear whether the company’s previous plan to sell convertible bonds will still materialize.

It previously planned to sell bonds worth Rp 4.26 trillion that could be converted into shares to Northstar to pay off debts, allowing Northstar to get up to a 31 percent stake in Bakrie.

Bakrie director Ari S. Hudaya said the company was also considering selling its units through initial public offerings (IPO) to pay off the debts.

Bakrie has been striking deals with a number of investors since the end of 2008 to settle $1.1 billion of debt to Odickson.

Northstar agreed last November to settle the Odickson debt, which had dropped in value to $575 million.

Bakrie and Northstar then agreed to form a joint venture with a 70:30 composition as part of the debt settlement, for which the venture will get a 21.4 percent stake in coal giant PT Bumi Resources, Bakrie’s most prized subsidiary.

It is not clear whether the loan restructuring agreement will change the form of the joint venture.

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