Davomas receives payment suspension on 11% notes; company appeals

By Caroline Salls

Pittsburgh, Aug. 21 - Davomas International Finance Co. Pte. Ltd. said a temporary 45-day suspension of debt payment decision has been issued by the Commercial Court of Central Jakarta after two holders of $200,000 of the company's $238 million of 11% guaranteed senior secured notes due 2011 filed a debt payment suspension petition, according to a company news release.

The court has appointed Swandy Halim as the administrator in the company's suspension of payment proceeding, and scheduled a hearing for Sept. 14 for creditors to vote on any composition plan for PT Davomas Abadi Tbk.

PT Davomas has appealed the payment suspension, according to the release. If the appeal is unsuccessful, the company said it plans to file a composition plan to be voted on by its creditors.

Since there is uncertainty as to whether a composition plan approved under the Indonesian Bankruptcy Law will be recognized or enforceable outside the Republic of Indonesia, the company said it intends to launch an exchange offer for the notes if a composition plan is approved.

If a composition plan has not been approved by the company's creditors within the 45-day period, the court will immediately declare PT Davomas bankrupt unless the creditors attending the hearing agree to grant the company a permanent suspension of debt payment, which cannot exceed 270 days after the date of the temporary suspension.

However, if a composition plan has not been approved by the creditors by the end of the permanent suspension of payment period, the court will immediately declare the company bankrupt.

If the company is declared bankrupt, a curator will be appointed to liquidate PT Davomas' assets for the benefit of its creditors.

Davomas International is a Singapore-based special purpose vehicle of Indonesian cocoa producer P.T. Davomas Abadi Tbk.

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