S

hares of PT Bakrieland Development were suspended on Tuesday after its creditors holding US$155 million worth of equity-linked bonds filed a debt postponement petition (PKPU) with the Central Jakarta Commercial Court.

Under a PKPU, a company will be given an opportunity to propose a debt settlement to all of its creditors, not only related to the amount of equity-linked bonds. If the company fails to obtain creditors'€™ approval for the debt settlement proposal, the court will declare the company bankrupt.

However, Bakrieland, the property flagship of the politically wired Bakrie family, still has 20 days to settle the payment of the company'€™s $155 million bonds out of court in order to escape the PKPU process.

Under the law, the commercial court will give an order over a PKPU appeal within 20 days of its submission. The PKPU was submitted on Sept. 2.

'€œWe will try to settle our obligations to petitioners through [debt] restructuring negotiations before the court responds to the petition,'€ Bakrieland'€™s chief corporate affairs officer, Yudy Rizard Hakim, said on Tuesday.

Bakrieland is working to restructure its equity-linked bonds, which were issued through its special purpose vehicle, BLD Investment Pte. Ltd., in March 2010.

The bonds were supposed to mature in March 2015. However, bondholders exercised on March 20 this year a put option, which matured the equity-linked bonds.

Bakrieland president director Ambono Janurianto said that the company was offering a restructuring plan for the debt papers to bondholders. The plan includes a proposed maturity extension by three years to 2016, changing the status of the debt papers to secured from unsecured, payment by installments and a likely increase in interest rate from the current 8.625 percent.

The negotiation of the bond restructuring had not borne fruit as of the end of last August, Bakrieland told the Indonesia Stock Exchange (IDX).

Bondholders seem to be disappointed with Bakrieland for its failure to pay creditors, despite claims of assets, reserve money and good profits.

Bakrieland reported Rp 301 billion in profits in the first quarter of this year, with total assets reaching Rp 16.5 trillion, cash and cash equivalents of Rp 311 billion and restricted funds of Rp 362 billion. The company has also recently sold a number of its assets.

'€œFaced with this claim [of poor finance], the bondholders have tried at least four times for over half a year to help Bakrieland to meet its obligations. Each time they promised to pay but never followed through,'€ the representative added.

Ambono said recently that cash payments for the equity-linked bonds would put the company in a difficult situation as it would run out of fresh money to support its ongoing development projects.

Bakrieland divested in October last year its stake in toll road developer PT Bakrie Toll Road for
Rp 140.5 billion, and 15 percent in PT Bukit Jonggol Asri for Rp 300 billion in April this year.

Also in April, it sold its stake in PT Bali Nirwana Resort for Rp 700 billion and used the money for a down payment for a residential project in Bogor, West Java.

Bakrieland also earned Rp 747.63 billion in March from selling land in Karet and Rp 868.93 billion from selling another plot in Rasuna Epicentrum in South Jakarta.

Bakrieland has used the money from the land sale in Karet to purchase a company with 538 hectares of land in Sidoarjo, East Java, with total spending reaching Rp 3.1 trillion.