Perkebunan Nusantara III (PTPN), a palm oil producer, has come under liquidity pressure this year. The firm sent out a payment deferral request for its $390.6m two year debut syndicated loan in May, asking lenders to accept the delay of an interest payment due that month and a principal payment in June.
But banks have declined both the requests, saying PTPN has enough cash in its debt services account to cover the payments.
PTPN managed to make an interest payment of about $3m in May. But last week, when the company was supposed to repay about $10m of principal, it missed the payment, said two bankers close to the situation.
One of the bankers said PTPN is negotiating with creditors of its other debt for standstill agreements. But one of the requirements of the standstill agreement is that PTPN cannot make payments on any other debt, including the syndicated loan, putting lenders in limbo.
The company has also sent a separate waiver request to the syndicate group of the dollar loan, asking them not to accelerate payment. However, the firm did not say when it is planning to make the payment.
PTPN has not provided details of its other debt, including the names of the creditors, said a banker familiar with the deal. Another banker said PTPN is blaming Covid-19 for its liquidity stress.
“The situation is more complicated, but no one knows what the real story is; everyone can use Covid-19 as an excuse,” the second banker added.
A conference call was arranged on Thursday morning by PTPN, but it was conducted in Bahasa Indonesian. Bankers said they are waiting for the meeting minutes for more detail.
Local rating agency Pemeringkat Efek Indonesia said in an announcement on July 1 that PTPN is planning to restructure all its bank loans. It added that PTPN had Rph41.8tr ($2.9bn) in outstanding loans as of April 30, 2020.
The bankers added that PTPN has not disclosed its financial status since May. It is unclear whether the company has enough cash if banks decline the waiver again.
Sumitomo Mitsui Banking Corp was the sole mandated lead arranger and bookrunner of PTPN’s dollar loan.
A group of 17 lenders participated: Aozora Asia Pacific Finance, Bank of East Asia, Bank of the Philippine Islands, Chang Hwa Commercial Bank, China Construction Bank Indonesia, CTBC Bank, E.Sun Commercial Bank, Eastspring Investments, Hua Nan Commercial Bank, Hyakugo Bank, IBJ Leasing, KB Kookmin Bank, KEB Hana, Korea Development Bank, Shinhan Indonesia, Shanghai Commercial and Savings Bank and Taiwan Shin Kong Commercial Bank, according to Dealogic.
PTPN declined to comment when contacted by GlobalCapital Asia on Thursday.
SMBC did not answer calls from GlobalCapital Asia for comment.
SOE woes rise
PTPN’s missed payment has added to concerns about the support state-owned enterprises will or will not receive from the government.
In March, Tiphone Mobile Indonesia, which is 24% owned by state-owned Telekomunikasi Indonesia, defaulted on a $182m-equivalent three year revolver signed in 2017, after it failed to make an interest payment.
The rise of defaults and stressed situations is affecting banks’ ability — or willingness — both to commit to new deals and to accept covenant waivers.
TV channels operator Trans Media Corpora, part of privately-owned conglomerate CT Group, obtained a waiver in June for a March covenant on a $301.9m-equivalent five year loan. Banks agreed to relax the debt to Ebidta ratio to 3.5 times from three times temporarily. But bankers now say that if the company seeks another waiver for a planned June test of the ratio, it has less chance of success.
Two bankers said they will not respond to Trans Media’s request, representing a no from them, while a third banker said he is following PTPN’s case closely, which will affect his firm’s decision.
“If state-owned PTPN didn’t get enough government support, we are worried that problems from privately-owned companies will be worse,” said the third banker close to Trans Media. “We will have also have second thoughts about the few deals launched in the market recently.”
Sentiment change
Two Indonesian companies tapped the offshore loans market last week.
Private company Indomobil Finance Indonesia is seeking a $240m loan and state-backed Sarana Multi Infrastruktur (SMI) is looking for a $500m refinancing. Both are in syndication.
More borrowers are planning to launch deals shortly.
State-owned Bank Rakyat Indonesia is expected to open a $1bn loan next week, while a syndication is likely to be arranged for Indofood CBP Sukses Makmur’s $2bn acquisition loan in August.
Banks are still bidding for a planned $500m loan from state-owned Perusahaan Listrik Negara.
Both the SMI and Indomobil loans were initially supposed to be club loans. But the lead banks changed tack after receiving reverse enquiries from Taiwanese banks.
But some of that positive sentiment among Taiwanese lenders has now taken a hit.
A banker whose firm had been keen to participate in BRI’s deal — and had already done a lot of the preparation ahead of the loan launch — said her bank is much less interested now, owing to the troubles at other state-owned borrowers.
“We won’t say no immediately, but it will require much more evaluation of BRI,” said the banker. “Even if we decide to participate, it will be a small ticket size.”
A banker who is part of PTPN’s syndicate group said his firm has stopped lending to all Indonesian borrowers.
“We have reached our country limit. In the past, we would apply for an increase in the limit; but this year we didn’t.
“We participated in PTPN’s deal not because of how good the company’s financial was; it was because we felt comfortable with its state-owned background. It has hurt our confidence in lending to the country,” he added.
A banker away from PTPN said he was surprised the government did not step in to help the oil company.
“We had already decided to participate in fewer deals starting from March,” he added, “but if there’s more negative news coming, it may affect our confidence in the Indonesian government.”
Emails to Tiphone’s three email addresses published on its website bounced back. Trans Media did not respond to calls or an email for comment.