JAKARTA (Reuters) - Indonesian telecommunication operator PT Bakrie Telecom Tbk (BTEL.JK) has found a creative way to ensure that its debt restructuring was approved over some creditors’ objections: it loaned itself money and then counted its own votes toward approving the plan.
Below are the background and milestones in Bakrie Telecom’s restructuring process:
Bakrie Telecom Tbk set up a special purpose vehicle - Bakrie Telecom Pte Ltd [BTELB.UL] - to sell a $380 million bond in New York in 2010. The bond matures in May 2015 and bears an 11.5 percent coupon.
Bakrie Telecom Tbk guarantees the bond while Bakrie Telecom Pte Ltd lends the proceeds to the listed parent company under an inter-company loan agreement.
Nov 2013 and May 2014 - Bakrie Telecom Tbk and its three subsidiaries - Bakrie Telecom Pte Ltd, PT Bakrie Network and PT Bakrie Connectivity - failed to make two interest payments on the $380 million bond.
Sep. 22 - Universal Investment Advisory SA, Vaquero Master EM Credit Fund Ltd and Trucharm Ltd filed a lawsuit dated Sep. 22 in a New York state court, saying that the companies have indicated they will continue to default on their obligations.
Oct. 23 - PT Netwave Multi Media, a Jakarta-based supplier owed 4.7 billion rupiah ($368,627) by Bakrie Telecom Tbk, requested a Jakarta court to supervise the company’s debt restructuring in what is known locally as the PKPU process.
Nov. 3 - Bakrie Telecom Tbk said it will merge its network operations with peer PT Smartfren Telecom Tbk (FREN.JK).
Nov. 10 - The Jakarta court ordered Bakrie Telecom Tbk to negotiate a settlement with its creditors within 30 days.
Dec. 6 - The Bank of New York Mellon, the trustee of the bond, wrote a letter to the Jakarta court administrators, asking them to bar Bakrie Telecom Pte Ltd from voting on the restructuring proposal.
Dec. 8 - Bakrie Telecom Tbk held a creditors’ vote on its restructuring plan. The company said the proposal was approved by 94.5 percent of its creditors, including Bakrie Telecom Pte Ltd.
Dec. 9 - The Jakarta court validated the vote, making it binding on all of Bakrie Telecom Tbk’s creditors.
Dec. 10 - BNY Mellon wrote a letter to Bakrie Telecom Pte Ltd and Bakrie Telecom Tbk, saying that it did not recognize their actions and that some bondholders will hold the parties involved responsible for any loss.
Feb. 19 - Next court hearing related to the bondholders’ lawsuit in New York.
Reporting by Eveline Danubrata; Editing by Rachel Armstrong