Indonesia’s Bakrieland pays $29 mln debt, avoids default

Bakrie GroupJakarta — Indonesian property firm PT Bakrieland Development has obtained last-minute funding to redeem a 280 billion rupiah ($29 million) bond, avoiding default in the latest of a series of financial troubles to befall the Bakrie Group conglomerate.

Shares in Bakrieland were suspended on Monday by the stock exchange authority after it failed to redeem the bond on March 8 with Indonesian Central Securities Depository (KSEI), a custodian agency for capital market transactions.

The debt, which matured on Monday, and all interest due have been paid, the company said in an emailed statement late on Monday. It declined to give details on funding for the redemption.

KSEI will not be able to pay bondholders until March 13, however, missing the repayment date by one day due to a public holiday in Jakarta on Tuesday, March 12.

Bakrieland, one of the Bakrie Group’s main units, has agreed to sell its toll road unit and one of its resort assets to MNC Group as it aims to reduce its debt by more than $200 million in 2013. The deal has yet to be sealed.

Bakrieland has 4.6 trillion rupiah ($475 million) in debt and more than one-quarter of this will fall due in 2013.

“We will assign a ‘default’ rating if the company could not fulfil the bond repayment (by the time) the grace period – 10 working days – elapses, or even earlier if we are certain that the company will not be able to repay the bond,” said Vonny Widjaja, an analyst at domestic ratings agency PT Pemeringkat Efek Indonesia (Pefindo).

The company’s current CCC rating, assigned on Feb. 28, reflected its very weak capacity to repay the Bond, Widjaja said.

The Bakrie Group, founded in 1942 by Sumatran businessman Achmad Bakrie to trade local commodities such as cocoa and coffee, is known for acquisitions funded through debt.

Creditors see the next challenge for the company coming on March 23, when a put option can be exercised on a $155 million convertible bond. The company’s 8.625 percent 2015 bonds are quoted at a heavy discount to their face value and are trading like straight bonds given the conversion price of 255 rupiah, far above the shares’ last traded price of 54 rupiah before the trading suspension.[]


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