Sritex rolls out consent solicitation for PKPU proceeding plan

Chicago, Nov. 17 – Indonesia’s PT Sri Rejeki Isman Tbk. (Sritex) started a consent solicitation for a composition plan for the PKPU proceeding, according to a press release.

The consent solicitation is aimed at noteholders of the $150 million 6 7/8% senior notes due 2024 (Cusips: 38109KAC9, Y2749KAC4) issued by subsidiary Golden Legacy Pte. Ltd. and guaranteed by Sritex and the $225 million 7¼% senior notes due 2025 (Cusips: 69408LAB2, Y714AGAB8) issued by Sritex.

For the plan to be effective, it must be approved by a 66 2/3 majority of each class of creditors casting their votes.

If the plan is not approved, liquidation may be imminent.

In the plan, current noteholders would receive $187.5 million of tranche A secured notes and $187.5 million of tranche B convertible notes, both issued by Sritex.

On the convertible notes, an exchange offer will be made where holders can exchange their convertible notes for long-term notes on a dollar-for-dollar basis.

The tranche A notes would have a first-ranking security over fixed assets, inventory and receivables with an indicative security coverage ratio of approximately 97%.

There would be a single balloon payment in the ninth year with a periodic early redemption on an annual basis through a reverse Dutch auction.

Interest would be 2%. It would be paid as a combined cash and pay-in-kind payment. The cash portion would step higher in the first three years and reach 100% status by the fourth year and the PIK payment percentage would accordingly decrease. The cash payment would start as 3/8% and the PIK payment would being as 1 5/8% (for a total of 2%) with the balance adjusting in the first three years, said another way.

For the convertible notes there would be a mandatory conversion in year five based on fair and reasonable value.

For the long-term notes, if holders were to exchange into them from the convertibles, there would be a single balloon payment in year twelve, with a periodic early redemption on an annual basis through a reverse Dutch auction from year 10 onwards.

The rate on the long-term notes would start at 0.1% and step up to 2% per year in year nine.

In terms of liquidation, if the requisite votes are not obtained, holders of notes can expect to receive approximately 8 cents on the dollar.

Voting noteholders must hold their existing notes on Nov. 29.

Voting can be accepted through 5 p.m. ET on Nov. 30.

The creditors meeting is on Dec. 2.

Morrow Sodali Ltd. is listed as the information and tabulation agent (+852 2319 4130, 203 609-4910, +44 20 4513 6933, sritex@investor.morrowsodali.com, https://bonds.morrowsodali.com/sritex).

Sritex is an Indonesian textile manufacturer.

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