Lenders face hurdles in Indonesian firm’s restructuring

THE restructuring process for an embattled Indonesian media company is putting the spotlight on the struggle private lenders may face in recouping their money from borrowers in the country.

Visi Media Asia, controlled by the giant Bakrie Group, came up with a new restructuring proposal on Jul 16, under which it would delay final repayment of the principal amount of debt owed to a group of private credit funds by as much as 30 years. But the private lenders are not included on a list of verified creditors in the court-supervised restructuring process, meaning they cannot take part in any discussions on a possible deal or vote the plan down.

The latest plan offered to the group of private lenders is significantly worse than that offered to other creditors who are included on the verified list.

The proposal given to other creditors generally stipulates the debt will be repaid within 10 years, according to a document seen by Bloomberg.

The Visi Media case is far from the first of its kind in the country. There have been a number of instances where local courts have excluded bondholders and bank lenders from the verified creditor list during debt restructurings to ensure that companies’ proposals can be passed unopposed.

The group of private lenders includes Varde Partners, Tor Investment Management, AB CarVal Investors, Arkkan Capital, Goldman Sachs Group and UBS Group, who together claim that they are owed US$560 million including interest. BLOOMBERG