BLT debt-to-equity swap deal shot down

BLT had defaulted on its 2007 IDR1.35trn ($100m) bond issue in 2012, which led to an agreement to postpone the debt payment from April 2013 to April 2017.

BLT, whose stock has been suspended since 2013, recently requested to amend the agreement and offered to convert the bonds to stocks, which predictably met with a cold reaction from its main bondholders, who noted that BLT had tried to slip in a haircut into the deal as well.

“We don’t agree with the proposal because we want the debt to be paid off according to the original agreement,” ADPI chair Mudjiharno Sudjono said. “On top of that, the company is cutting up to 96% of the total bonds in the proposed amendment.”

According to Mudjiharno, 46 ADPI members had bought Berlian Laju Tanker’s bonds at a total value of IDR139.6bn. It was also pointed out that apart from unfavourable terms the proposed amendment would actually violate a 2015 regulation by the Financial Services Authority (OJK), which bans debt-to-equity conversions for pension funds.

ADPI, along with six other companies that bought BLT’s bonds, is now working to rescind the proposed amendment. The association has taken up legal counsel for the matter, although it is not yet planning to sue the company.