Cliffhanger Bond Series : Trikomsel Bond Restructuring … Updated
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Early days yet since the shocking announcement that one of private banking’s favourite bonds, Trikomsel SGD, is considering a debt restructure and is considering hiring law firm Ashurst LLP after naming FTI Consulting as their restructuring adviser.
Restructuring debt is usually interpreted as a form of default which means that equity holders will be almost certainly wiped out and yet it could have a broader meaning to smaller matters such as reducing coupons and extending maturity dates.
Trikomsel bonds have financial covenants limiting their FCCR (fixed charge coverage ratio) to be limited to under 2.0. FCCR = (EBIT + FC) / (FC + interest)
Surely those covenants would have done their job in keeping their expenses (debt) in check unless we are talking about a sudden fall in their EBIT which does not warrant bankruptcy of any sort ?
Facts :
Aug 2014
Catalist listed company Polaris buys stake in PT Trikomsel for S$ 290.5 mio from Standard Chartered and JPMIB.
Polaris provides telecommunication services and has a market cap of S$255mio and owns an estimated 45% of the company.
Mar 2015
Trikomsel and Singapore Post agree to form a joint venture in Indonesia with SingPost taking up a 33% stake for about US$1.1 mio.
April 2015
Softbank, Japanese mobile giant, acquires 19.9% of PT Trikomsel for US$ 120 mio.
The period between April and October was silent until the restructuring announcement that comes unexpected for most investors as Trikomsel bonds actively changed hands between private banking customers and reporters focused on the more basket cases of Swiber, Otto Marine, Ezra, Pac Andes/China Fishery, Noble and gang.
Then came the stunner with no warning that the company intended to restructure its debt and bonds are now indicating 50 cts (screen prices indicate higher) and margin calls are streaming in as we understand that leverage of up to 70% have been granted for some of those debt purchases.
Clients are unhappy and we have stories of how some “preferred” clients have been tipped off to sell and their holdings been distributed to unwary small clients because not many banks have lines to hold their paper.
Hold on …..
- restructuring means equity holders would have to agree to be wiped out too !
- what does Softbank and Stanchart have to say ?
- is the company using the fact that the bondholders are retail buyers to bully them for the benefit of shareholders ?
- why didn’t Muddy Waters or Iceberg and the other financial vigilantes spot this ?
Bondholders have a right to stand up and demand forced liquidation which can punish shareholders first and that is something bondholders will have to realise except that 90% of Trikomsel bonds are estimated to be in the hands of passive retail buyers who do not usually take up the cudgels for their cause like activist investors typically do.
Trikomsel Singapore, a wholly owned subsidiary has a paid up capital of S$1.00.
Will we wait for 26 October to find out during the bond investor meeting ?
What would be ideal now is that we have an activist hedge fund step in to swoop bonds up at cheap prices to get themselves into that 26 Oct meeting but unfortunately Singapore does not have too many of those or any at all given that Singapore is a leading arbitration centre and not a litigation centre which is good news for issuers. The bonds are governed by English law.
We can only hope that bond investors would unite to form a majority to exert their rights on the trustee and wait for the 26th to see what everyone has to say.
Addendum To Trikomsel
1. Restructuring needs shareholder consent too if it involves bankruptcy
2. If the restructuring is framed as a consent solicitation then shareholders need not be consulted
3. There is a chance that Trikomsel is doing this on their own because the covenants affect their loans too i.e. the FCCR of 2.0, and they have quite a few loans out there.
Dear TH,
As a noteholder of trikomsel, the news came too sudden. Almost choked on my noodle when I received the call from my banker. Since Polaris spent 290mil and Softbank spent USD 120 mil on acquiring trikomsel, they would not let their investment wiped out? the outstanding Singapore bond issue is only 210 mil SGD, will the majority shareholders have more interest to preserve their investment?
Is restructuring a good sign for company in distress? at least they bother to attempt to settle liabilities unlike the last default by Celestial Nutrifoods Ltd. I am wondering about the outcome on 26 OCT. Will there be a voluntary haircut of 50%, similar to the fate of Hidili bond? Cross my fingers and pray for mercy.
Blaming poor sales/cash flow to USD & economy is a lousy excuse for debt restructuring (Please see below article for more information). I use USD forward contract even for small amount like USD100K.
Perhaps it will be more appropriate & better for present Trikomsel mgt to resign than this restructuring.
Hair cut is illogical as years of accumulated profits & now with only just a bad quarter, the company wants to compromise noteholders.
As EDZ has written, noteholders must be prepared to exercise their legal right to demand forced liquidation of the company if their terms are not acceptable. I supposed that with SGX listed Polaris & Softbank combined 65% of Trikomsel, it may be easier to enforce court orders as these entities are outside Indonesia. You will need to seek proper legal advice.
(For your information – Article from Jakarta)
http://jakartaglobe.beritasatu.com/business/cellphone-distributor-erajaya-remains-optimistic-on-sales-despite-sluggish-economy/
Jakarta. Publicly listed cellphone distributor and retailer Erajaya Swasembada is upbeat on achieving its sales target of Rp 15 trillion ($1.05 billion) this year, backed by a wave of budget smartphones from Taiwan and China pouring into Southeast Asia’s largest economy.
“We may even exceed Rp 15 trillion, since we’ve already booked about Rp 8.6 trillion in the first half of the year,” said Djatmiko Wardoyo, Erajaya Swasembada corporate secretary .
“There was a slight decline in sales in August, which was in line with the industry, but we’re starting to see some pick-up in September.”
It is too early to jump the gun and speculate what they mean by “restructuring” when no formal announcement or filings have been lodged.
Major shareholders have been quiet too so we can only hope that this is the result of legal business dealings and possibly due to problems with their receivables on their balance sheet which have blown up recently.
Polaris is a Catalist listed company that recently got included into the Catalist Index http://www.straitstimes.com/business/companies-markets/catalist-index-to-include-14-more-stocks and thus, the SGX should have got them covered, along with their sponsor, Stamford Services (jv between Zico Holdings and Stamford Law).
It is too early to jump the gun and speculate what they mean by
“restructuring” when no formal announcement or filings have been lodged.
Major shareholders have been quiet too so we can only hope that this is
the result of legal business dealings and possibly due to problems with
their receivables on their balance sheet which have blown up recently.
Polaris is a Catalist listed company that recently got included into the Catalist Index http://www.straitstimes.com/business/companies-markets/catalist-index-to-include-14-more-stocks
and thus, the SGX should have got them covered, along with their
sponsor, Stamford Services (jv between Zico Holdings and Stamford Law).
What are the practical steps to forming a majority to assert bondholder rights? The stock has hardly moved given the magnitude of recent news which i find deeply suspicious…
Highly illiquid stock. No movement since last August till the last 2 days. However last 2 days volume is so low that it is as good as having no transaction.
However I did noticed that this news have minimal impact on Polaris stock price as it is still trading 0.13-0.14, down from 0.15-0.16 since the news was released a week ago. Could it be due to penny stock play for Polaris?
Thanks. I was just searching on the same points the past few days. The Trikomsel share price has not dropped much, despite the low vol / no vol.
As for Polaris, the price is too volatile to really be able to make any inferences, though there has definitely been a drop the past week. No announcement by Polaris on SGX though, for what it’s worth.
For an interim update.
The conference call is 10am-11:30am Monday 26th Oct 2015.
Seek initial advice from your private bank for the next-course-of-action only after the conference call.
Thanks Jim for posting this information.
As a sour faced Trikomsel note holder, I see a very grave situation here. The likelihood of a coupon haircut or maturity extension seems like a fairytale especially when Bankruptcy Support Service provider FTI Consultants is being called in to sort matters out. This note is afterall senior unsecured and I would guess the secured creditors “aka banks” most likely “appointed” FTI to protect their interests. Between the decline in Indonesia growth and the weakening of IDR, which lead to subsequent raising of interest rates to stem IDR outflow, I do suspect it’s the latter that’s the only culprit. At 5+ and 7+%, it’s a tough obligation to fulfill when IDR has weakened so much against SGD against a backdrop of 7.25% interest rate oweing to the banks.
Polaris and Trikomsel stock have hardly budged which could also signify that the company isn’t going to be insolvent. But could it be possible that these bonds will be swapped into equity instead!!!? I find it hard to believe Trikomsel would give up and force liquidation. Closing 900+ retail outlets archipelago wide. They’d rather hold on to the cash raised and in ‘return’ make me a shareholder of the company??
Anyhow, the situation is dire considering how much buzz this bond had before. Getting back principal by maturity is unforseeable given the permutations. This is their idea of Halloween. *hmph*
Let’s hope that everyone especially Trikomsel management has really over-reacted probably just over one quarter bad results (Jul-Sept) though they preferred to call it proactive debt management.
As a layman looking into the financial results for the past 5 years, below is my findings:-
Trikomsel has been profitable for the last 5 years.
Net Income 1,667 billion IDR (SGD170mio) from 2011 to 2014.
Total Dividends paid from 2010 to 2013 is SGD29.55mio (4yrs). 2014 no dividends despite highest net income 48mio.
The latest balance sheet dated 30 Jun 2015 showed below figures (in SGD): Figures pretty consistent for the last 3yrs.
Cash SGD52mio
Inventories SGD516mio
Account Receivables SGD293mio
Total Liabilities SGD700mio
http://quotes.wsj.com/ID/XIDX/TRIO/financials/annual/income-statement
Hope this information helps!! I don’t really think Trikomsel want to waste their time in 2-3yrs legal proceedings to make a mountain out of a molehill.
Last quarter (with Fed rate hike, Chinese Yuan devaluation, Commodities rout) is especially bad for all everyone, not just Trikomsel. They really lost their cool.
Do remind them that their closest competitor Erajaya is much performing better in 2015 than 2014. Performing >200% more revenue with 500 outlets as compared to some 900/1000 Trikomsel outlets.
Major decisions should defer for another 1-2 quarters. Oct-Dec quarter is traditionally the strongest quarter especially with new handset models.
In the event of coupon default, the secured creditors especially the banks are likely to recall their loans.
Prompt resolutions like only extending maturity date will serve the company interest best. They can do this before 10 Nov next coupon date.
An onshore bond broker contact told me that Trikomsel said it had fully hedged their foreign currency liability – there is no way for me to verify this. This can mean many things because it depends on when they put on their FX hedge and how they did it. For those two bonds – issued back in May 2013 and June 2014: the first would have caught a 33% devaluation of the IDR up to the recent SGD spike post-MAS which has since come off – that still leaves a 27% IDR crash vs SGD; but the second bond would have seen under 6% devaluation of the IDR to SGD.
Unless they got a bank to restructure a hedge for them, the IDR OTC FX forward market is at best liquid up to 12m which means they would have to roll their hedges year by year. The cost of a 12m hedge had gyrated between 6% to 18% during these last three years, with the peak being in Q3 2013 – right after Trikomsel’s first bond issue. On average, it would have cost the company at least 10% of hedging costs in these last three years – this is assuming their banker didn’t impose a huge bid-ask spread on them. So basically for raising these two SGD bond issues, their actual costs is close to 20% in IDR equivalent with hedge, making it dumb of them to have even raised SGD funding to begin with. The sums wouldn’t have looked much different if they had hedged through options. But this is all jibberish now because we all know it and so does the company by now with hindsight. That first bond was issued after a 16% devaluation of the IDR vs SGD in the prior year (2012) and Trikomsel probably thought the IDR weakness is behind them. Also 2013 had a false dawn in the US recovery and Greece hadn’t surfaced. By 2014, Jokowi came into the picture, raising fresh hopes for the Indonesian economy only to disappoint after barely half a year.
I share Stan’s fear about a debt-equity swap deal. There was a line – and actually only this one line that caught my eye which came out of the company press statement on the day of revelation – they said the company cannot “indefinitely” service debt. This makes me ponder over the equity route: is this because Softbank wants out? Or is there a plan to go private instead which is not difficult given that the free float of the company is only about 12.6% (correct me if I’m wrong but this is what I can see on the screen)? There is a COC (change of control) clause in both bonds at 101 which “could” be triggered if this company goes private, meaning that they would have to pay out the bond holders above par. What’s life after going private, one may ask? Well, the company with new owners can restructure the whole business, rebrand and come back after everyone has forgotten the Trikomsel name.
Here’s my guess – bondholders will be given two options on next Monday – a. early redemptions with a huge principal cut or b. stay put with a coupon cut and maturity extension. Now if you believe in the “go-private” scenario, there is a white knight – white no doubt but cheapskate – who would suddenly emerge next year and then all the remaining bonds will be taken out?
Not being such an expert on “credit” events since a. I’m Singaporean (!!) and b. I’m a macro person, it would be great to hear from others. Because sadly, I am also a creditor of this $%@#(*(!&%!! company. And I’ve been chasing my banker to get the conference call details with no success. Has anyone received something in the mailbox? From the screen, I can see that two German funds holding the 2016s and one of them holding the 2017s. In total, they barely hold 2.3% of the 2016s and 0.7% of the 2017s. We’re on our own, my friends, scattered across the various PBs in this country. How can we act together? I have thus far heard that the company intends to only allow nominated investors to join in the call – which means at best your PB going into this call on your behalf. And the submission of the nominees joining the call apparently closed today, 22 October at 3pm. The window was opened for only a very brief few moments this afternoon for bondholders to express their interest in joining in the call. It will be hard for us to put a class act on this as EDZ suggested. Any suggestions?
Hey dialastrategist, my family is also holding this pathetic bonds (unfortunately) I may get a slot for Monday conference call from my PB. I can only confirmed on it tomorrow. Let me see whether we could share this slot together. Understand from my banker, there are another 20+ affected accounts with their PB.
Could you care to elaborate more on “all the remaining bonds will be taken out?” Do you mean to say “Redeemed at par”, “Wipeout” or the same fate as “Haircut”?
On a lighter hearted note, perhaps Trikomsel needs a new accountant, preferably one from an US bank who can easily apply Lehman 101 rules, to create a “liability revaluation” reserve (if bonds are 47 cts, it wud impute to a profit of 53 cts to the company). This is what some banks did during the crisis to boost their bottomlines. Their leverage ratio would look better as well, which would allow them to get some loans to tide over this spell as they work hard to pay off creditors and make profits to write off the “reserve” and write liabilities back up to 100 ?
By wipe out I mean redeem at par or trigger the COC at 101. It should be the latter if the ownership structure changed. That would most likely be the case if it goes private. I forgot another option which is that mentioned by Stan – debt equity swap which backs the idea that one of the key stakeholders eg SoftBank wants out. That would be the scariest scenario.
What I heard is this. One American Pb had $27mn on their books. A local bank had $8mn. The lead originator is an Aussie bank and they prob should have another big chunk.
It should be a dial up line. Let me know the details and we can see if that line can be shared.
So until now no one got anything from the mailman? I guess what happens is that they would “discuss” the options with this steering committee and then send out letters for us to respond individually. By which time they would probably miss the next and last coupon for the 2016 bond on 11 November. So get ready. This will be a default. :(((
I got the conference call phone number & participation number 20th Oct morning.
If your PB did not provide you, perhaps your PB is a problem.
You did? That’s not good. Did you get the details before yesterday when the company changed its mind?
Can you put the number here?
Ok – got the number through other contacts. Seems that even the conf call details were given out not in a streamlined fashion to the different PBs. Those who got the details earlier and passed on to their clients did so before the new notice came out yesterday afternoon to “restrict” the call. So let’s see if they change their call details last minute…
Glad that you’ve got the call details. I was informed too late as the registration email request to Trikomsel went unanswered. You are correct, only PBs are allowed to represent their clients for the conference call.
Thanks for the clarification. I’ll let you know the details once it is confirmed. I’ll request both my PBs whether they could organise a meeting with the rest of their affected clients. It may help to pay our various MPs a good visit to get government intervention since this might become a national issue. PM would be the best.
Here’s more info about the call – it is restricted to note holders registered on the CDP which in most of our cases, our PB nominee accounts.
http://infopub.sgx.com/Apps?A=COW_CorpAnnouncement_Content&B=AnnouncementLast3MonthsSecurity&F=2QN3D7QSL7RY82OW&H=beebd5d17e928063b1a7a0123401c2bbbae098546435530b2f01c784e0f387c9
Info abt steering committee and contacts for more ‘info’.
Hi Folks, unfortunately, I own one of the bonds too. Having had experience with defaults in the US, this whole Trikomsel thing just smells of shareholders protecting their interests and bullying the junior debt holders. In any case, no point guessing as to what/if until we hear what they have to say at the conference call. Also registered both with Juliana (TRIO) and my PB for a call. Not sure if I will get a in. Perhaps we can organize a group here and do the conference call together. Someone has a place we can meet ?
I totally agree with you.
I have not seen them try to do the right thing by raising cash (calling for rights issues,selling assets etc).
That makes me angry.
No need to guess what they will say at the conference call. It’s obvious.
I gladly look forward to forcing them into bankruptcy.
Trikomsel has hard assets.
There should be reasonable recovery value for us after liquidation.
Hope for best, prepared for the worst. If need to, I’m prepared to fight even if recoverable is zero. This is a matter of pride.
Yes RedBaron, I’ll be glued to this forum for sure. Unfortunately, my PB couldn’t get me the contact. Pls provide details when the news breakout on Monday as I don’t trust my PB in giving me an honest account of what transpired in the call.
To me, the worst case scenario is a big fat zero at the end of all this.
2nd worst is a default with a restructuring to lengthen tenor with major haircut.
3rd worst is a conversion to equity in rupiah!
Hi my PB informed that the company has overridden their earlier notice to allow all end noteholders to join in their conference call. The call is now restricted to only noteholders who are registered at the CDP – so this would be the PBs holding our bonds in their custody. In addition, they have been barred from divulging “details”. I’ve already told my PB to at least let me know the “outcome”, spare me all the sordid details. An analyst friend who had done these calls for work said it’s best to spare myself the agony and “blood boiling” experience anyway – yes, you will hear all kinds of lies. The mere “threat” of engaging FTI – which I guess aren’t cheap to begin with – is to scare us of the Bumi case.
I’m open to meeting up as a group. I work in the Shenton Way neighbourhood. As I’m about to go on a long block leave next Wednesday, I am only able to meet either after work on Monday or lunch time on Tuesday next week. Decide on a date, do a headcount and then we can decide on a venue – there are grass patches around… Kidding… Actually, swing by the bottom of Westin Hotel behind Asia Square 2 – usually enough space in normal lunch hour…
I’ll be honest – I am NOT prepared to get zero. Which means I won’t sit around and wait for some crooks to walk away with my money. If I have to hang a pig’s head somewhere… just tell me where…
Ok – who’s in and when? Please buzz here. I’ll get Tradehaven to come along and do the roll count.
I would have liked to meet you all, but am travelling next week. Could you please share info as and when available? I’ll do likewise (my bank is DBS).
I really wonder who is going to lend them money after this. I was initially inclined to think they wanted to “scare” the bond holders, but if they are going to burn their bridges (also with the other institutional lenders?), it makes me think that the situation is rather dire.
I’m in. Just provide the date, time & place.
I want to be in but i Kena National Service on Monday. So I will be brining the military along when we meet. Hurrah!
dialaS, You will not get zero.
financial statements on 30 Jun 2015:
http://www.trikomseloke.com/ID/pdf/Laporan%20Keuangan%20PT%20Trikomsel%20Oke%20Tbk%20per%2030%20Juni%202015.pdf
In Bn IDR
balance (30 Jun 2015): Assets 9062, Liabilities 6688, Equity 2374. Clearly not insolvent then.
Income: still making a small profit of 125 (6 months ending 30 jun 2015).
Theoretically
Trikomsel will need a 26% impairment in assets to wipe out their shareholders, before bondholders get hit.
Hi Folks,
Like many of you, we have been told that we cannot attend this call as as our notes are not registered with CDP. In any case, I think we should get together and with numbers we will have a stronger voice. I have setup an email account trikomselbonds@yahoo.com; I will keep a mailing list and give every one updates. I will also be speaking to lawyers and getting their opinions and prepare for the next steps. I will also write to TRIO and advise them that not letting us participate is prejudicial to my (or our?) interest and reserve my (or our?) rights. I have spoken to TH and I think she’s supportive and will help where necessary.
Awesome! Thanks RedBaron!
Just emailed you. Thanks for organising this.
Great Arrangement!! Appreciated!!
Just sent you an email with mobile contact too.
Thanks for doing this red!
Hi Folks, I am receiving emails. Please drop me an email with your contacts (email/mobile) and how many of which bonds you hold. If you have friends in the same situation, and want to be part of our group, please ask them to email trikomselbonds@yahoo.com as well.
Done. I’ve just replied on my holdings.
Great. Ok I got the call details. This case may get some of the PBs in trouble too for withholding information of an important event in the interests of noteholders. Particularly those PBs who did NOT even inform their clients personally and solicit their thoughts on how they wish to be represented on the call. I have already forewarned my RM to tell his bosses of what lies ahead. If they want to do it this way – I don’t really care who I eventually get my money back from – the company or the PB who is seemingly standing on the side of the company without checking on the rights of their clients and noteholders.
I’ll drop you a line Baron. 🙂
Ok. I’ve emailed the common email address and will pass this on to friends and Pb etc. There are something we no longer should chat openly here if we plan to take some class action. I’ve dropped Baron on my thoughts about the call itself. And suggested we meet on Monday after work.
Let’s try to get a wider group so that we can form a bigger chat.
Monday is good for me. I’ve also emailed to 2 PBs to reach out for fellow affected investors. I’ll follow up closely with them.
Folks as I mentioned below institutions holdings of these two bonds are 1-2% of the total outstanding unlike the bumi and Berau defaults. Coming from a fund management side I can tell you that one bond default is usually a drop in the aum bucket. I wasn’t embroiled in those two bonds so I don’t know how hard they fought the defaulters. But I imagine that they prob left the matter to lawyers and wrote it off. The defaulters probably knew about this and see them as easy meat. The trikomsel bonds are just the opposite. If we come together as a group of individuals their moral ground will be shakier than dealing with the institutions. That’s just my thought. My hope maybe.
Hi Folks,
Thanks all for writing in. Lots of information and many suggestions!! I will be collating them and sending an email summary (this weekend) and let’s see how we move from there. As a side note, I have been invited to sit in the call, so I’ll be attending as a silent party and will take notes and send a summary (after the call) as well. I hope we have as many people affected by this join us.
Some relevant dates:
1. next coupon payment for the 2016 maturity: 10 Nov
2. next coupon payment for the 2017 payment: 5 Dec
3. Q3 results: was 31 Oct (Fri) last year, so ought not be too far off for this year – maybe by next Fri?
For what it’s worth, Bondsupermart is quoting both the 2016 and 2017 at 49.95 / 60.05.
Q2 results are here for what it’s worth: http://www.idx.co.id/Portals/0/StaticData/ListedCompanies/Corporate_Actions/New_Info_JSX/Jenis_Informasi/01_Laporan_Keuangan/02_Soft_Copy_Laporan_Keuangan%5CLaporan%20Keuangan%20Tahun%202015%5CTW2%5CTRIO%5CTRIO_LKTT_Juni%202015.pdf
I’m not accounting-trained, so better if those amongst others better versed in these things take a read and update us, but I see the following:
About USD37m of cash / equiv. based on today’s exchange rate. Short of rolling over / getting new external financing, or selling assets, will be tough to repay borrowings. But they have shot themselves in the foot re new lenders?
Anyone can form a view on various other borrowings and maturities, i.e. new funding needs in the next 12 months or so?
They also have *mandatory* convertible bonds worth USD59m (today’s exch rate) issued to shareholders in July 2012, term 5 years, convertible 43rd to 60th month. Interest 3%, payable at time of conversion. So bondholders can convert any time from Jan 2016 until July 2017. This is money which is “sunk” into the company since they will become equity assuming (i) company does not default (ii) company can last that long.
Q2 results also state in Note 25 some information on their hedging for the 2 bonds:
a. “To reduce the risk of exchange rates fluctuation, the Company has entered into cross currency swaps with PT Bank ANZ Indonesia and PT Bank DBS Indonesia for notional amounts of SGD15,000,000 and SGD100,000,000 (Notes 25). These facilities will expire on May 10, 2016 and May 6, 2016.”
b. “To reduce the risk of exchange rates fluctuation, the Company has entered into cross currency swaps with PT Bank ANZ Indonesia, Deutsche Bank AG, Singapore and Standard Chartered Bank for notional amounts of SGD30,000,000, SGD35,000,000 and SGD33,000,000 (Notes 25). These facilities will expire on June 5, 2017 and
June 3, 2017.”
Thanks for compiling this! Great breakdown and analysis. I agree with your conclusion. Indeed, major shareholders are going to muscle their way through this and bully us retailers into accepting the terms drawn out on Monday’s “one-sided discussion”.
Bid prices of the 2 bonds also make sense if dialaS is right about the FX devaluation of the bonds since their respective issue dates. Principal value has probably been impaired and I doubt I’ll live to see 100% back. Looks like I became a victim of the currency war after all.
Indic bid offers are meaningless when no one is on other side of trade. Eg few months ago swiber cld not be sold at indic bid low 80s. Last time i checked no bids in mkt, not even on oda basis. Dbs last quoted in 70s, db /citi 50s which os standard for bonds in trouble. All eyes on mondays mtg bfore traders reassess positions.
If they hedged fx this should all the more not be an excuse for restructuring!!
Well, I think you speak for about 50% of the sgd bonds quoted out there and it is not a bed of roses even if you are lucky enough not to be the ladt Trikomsel bond holder out there.
My take is that is could spell as a coupon deferral with the happy ending of an early redemption as hard to imagine as it may be but which would buy them time to sort things out at a heavy price to shareholders. (Do consider hiring an american bank accountant)
Dbs is real nasty to extend them the $100 mio loan recently which could probably subordinate bond holders. Not a good outcome despite all the DBS shares we own.
Someone mentioned the word pray. And pray i shall, that it will not be as bad as we speculate on Monday.
Fingers crossed.
Hi TH, thanks for the best news of the week. At least, all of us want see funds raising effort to ease the problems.
Yah we will see. They will clearly miss the upcoming coupon on 11 November – 10th is deepavali isn’t it. And that implies a technical default which would leave only the vulture funds – I think very few left – and high risk individuals on the bid side for this issuer name. Maybe their plan is to just screw the sgd investors and protect the onshore creditors and balek kampung. Afraid the tell tale signs aren’t great given that they tried to restrict the conference call to nominee note holders. Come on – tell me how many of our PB actually called us up and ask how we like to be represented on this call? I certainly did not get any chance to be heard. And I’m very unhappy with my PB manner over the handling of this matter. And let me say loud and clear here, my Pb is DBS.
Enjoy your weekend. Relax, do some normal things. Worry more about the haze than this bond… Shit happens.
If they miss any payment
creditors may apply to Jakarta Commercial Court to put Trikomsel in liquidation bankruptcy.
Trikomsel or a creditor will almost certainly respond with a petition for
Penundaan Kewajiban Pembayaran Utang or PKPU .
This then starts the restructuring process legally.
Creditors will need to register to vote on the resulting restructuring plan.
At some future date we will get some recovery amount.
http://us.practicallaw.com/6-553-2910
http://www.amcham.or.id/newsrss/3581-what-are-suspension-of-debt-payment-obligations
From what I heard Bumi and Berau bonds are still in suspension after 1-2 years. Declared defaulted non servicing and marked at 16c. Need to read up more on those cases and do some comparison. For a start as many of us should get together and meet up to decide on a common cause of actions. Waiting for RB to give us the signal.
There are still restructuring. These things take years
Bumi : http://uk.reuters.com/article/2015/09/28/bumi-resources-debt-idUKL3N11Y33U20150928
Berau : http://www.dealstreetasia.com/stories/fuganto-widjaja-to-lead-indonesias-berau-after-arms-takeover-10682/
Also of note
Bakrie Telecom : http://www.valuewalk.com/2015/03/hedge-funds-bakrie-telecom/
Thanks for the articles. Quote from the 2nd article: “If it is the debtor rather than a creditor that initiates the PKPU
proceedings, the debtor must additionally prove to the Court that it is unable to pay the unpaid debt. This is to ensure that the proceedings are bona fide.”
Subject to actual cash position in the Q3 results, with the Q2 cash position the company itself ought not be in a position to initiate the PKPU process as it is possibly / likely not “unable to pay the unpaid debt”.
So dialastrategist is likely right that they will skip 1 of the upcoming coupon payments so that we as bondholders, i.e. creditors, are forced to be the ones to initiate PKPU process.
Just so I know, am I right to say that our banks are going to take a total back seat, i.e. it is up to us to make decisions and instruct the banks (as custodian of our bonds) to take action?
Or is it likely (question for the finance types amongst us) that their loans with lenders have covenants such that a default of our coupon payment amounts to a covenant breach in the bank loans as well? My point is whether we at least have the other lenders, i.e. big banks, as creditors, such that they will take action, and we indirectly get to “ride along”?
And any further light on whether any of the banks have holdings on their *own* books?
TH / EDZ, any chance we could trouble you to put up a new (or “sticky”) post that lets holders of the 2 Trikomsel bonds know that they can email trikomselbonds@yahoo.com if they want to be part of the group?
Someone I know who holds their bonds, and visits this site from time to time, did not realise that we’ve had some discussions and the email address group in the comments, so maybe we can reach out to a few more people through a new post.
Thanks – I’m really glad we have this site so we are not alone. Don’t want to think how I would have reacted if I were dealing with this all by myself.
Can someone verify whether these are the details of the conference call?
• Since 2015, continuous decline in company’s operations. Deterioration in
consumption and sales, plus IDR depreciation.
• Pressure working capital position. Pressure to fund new inventory to generate
sales.
• Restructuring to help in sustain long term business
• To improve cash flow – reduce retail stores and employees implemented
• All retail shops all leased.
• Bank lender meetings, details in a few week.
• Will not make coupon payment on bonds, but will make payment on bank loans out
of indo.
Wade, I make no comment re the contents of your post.
However, whatever was discussed in the concall may be subject to confidentiality obligations, so best that you remove your post to avoid any risk of issues.