Indonesia's Gajah Tunggal extends exchange offer for 10¼% bonds

By Angela McDaniels

Tacoma, Wash., July 7 - PT Gajah Tunggal Tbk. has extended the voting instruction deadline and expiration date in the exchange offer for $420 million of 10¼% guaranteed bonds due 2010 to 11 a.m. ET on July 16.

Previously, the deadline for giving voting instructions was July 1, and the offer expiration was 11 a.m. ET on July 3. The early exchange deadline of 11 a.m. ET on June 26 was not extended.

The offer to issue new dollar-denominated callable step-up guaranteed secured bonds due July 2014 in exchange for the existing notes began June 12.

Both the existing and new bonds are issued by subsidiary GT 2005 Bonds BV and guaranteed by Gajah Tunggal, according to a company news release. The new bonds will be secured by assets of Gajah Tunggal valued at $140 million.

The company is also soliciting consents to amend the terms of the note trust deed. Among other things, the amendments would allow GT 2005 Bonds to call any existing notes that remain outstanding after the settlement of the exchange offer.

Bondholders approved the first extraordinary resolution at the first bondholders meeting on July 6 in Singapore. However, the second bondholder meeting failed to reach the required quorum and was adjourned to July 21.

Because tenders and voting instructions in favor of the proposed amendments have been received from more than 75% of bondholders, the company expects to reach the required quorum and approval for the second extraordinary resolution at the adjourned meeting.

As previously reported, the offer is part of Gajah Tunggal's debt restructuring plan, which the company said is being undertaken in order to meet its obligations to its creditors while preserving enough liquidity to sustain its business operations.

The ultimate objective of the offer is to avoid a default under the existing bonds. The more immediate objectives are to capitalize the coupon payable on the bonds July 21, reduce the cash drain from interest expense in the short to medium term and address the refinancing needs of the company by extending its debt maturity profile.

The coupon for the new bonds is initially 5%. It steps up to 6% in 2012, 8% in 2013 and 10¼% in 2014.

Gajah Tunggal will be restricted in its ability to pay dividends, make other restricted payments or incur new debt until the coupon on the new bonds reaches 10¼%. The company can increase the coupon to 10¼% before 2014 if it chooses.

Holders who tender their notes for exchange will be deemed to have given consent to the paying agent, as proxy, to cast votes in favor of the amendment at the meeting.

The company is offering $1,051.125 principal amount of new notes for every $1,000 principal amount of notes exchanged by the early exchange deadline and $1,001.25 for every $1,000 principal amount of notes tendered after that time but before the offer expiration.

Holders will also receive a capitalized interest payment of $51.25 per note.

The settlement date is expected to be July 24.

The conditions to the offer - the required quorum being met at the first meeting and the majority of bondholders voting in favor of the proposed amendments - have been met.

The dealer manager is Credit Suisse (call debt syndicate group in Hong Kong at +852 2101 7233 or liability management group in London at +44 20 7883 6748). The information and exchange agent is Lucid Issuer Services Ltd. (+44 20 7704 0880).

Gajah Tunggal is a tire manufacturer based in Jakarta, Indonesia.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.