Bakrieland escapes bankruptcy proceedings

JAKARTA. A subsidiary of PT Bakrieland Development has escaped bankruptcy proceedings, at least for now, as the Central Jakarta Commercial Court rejected on Monday a debt-postponement petition by the company’s bondholders over US$155 million bonds.

The court ruled that the case against BLD Investment Pte. Ltd., filed by London-based Bank of New York Mellon, was beyond its jurisdiction and should be settled according to English law.

“Considering that the commercial court has no authority to examine and adjudicate the case, the submitted debt postponement petition shall be rejected,” judge Aroziduhu Waruwu said on Monday.

The debt postponement petition, known as PKPU, was filed earlier this month when BLD Investment Pte. Ltd. failed to meet its obligation to pay US$155 million on equity-linked bonds, which matured last March.

Under a debt-postponement petition, a company has to provide a debt-settlement proposal to all its creditors. If the company fails to win approval for the proposal, the court can declare the company bankrupt.

The presiding judge at the commercial court said that the petition was rejected for a number of considerations, including an agreement between the parties in 2010 to settle any dispute according to English law.

Responding to the ruling, the bondholders said they were disappointed but appreciated the decision.

Nira Nazaruddin, lawyer for the bondholders, said she would study the ruling and talk with the bondholders before doing anything. “We need to discuss this with our clients as to whether or not we will appeal [to the Supreme Court],” Nira said.

Meanwhile, Bakrieland’s corporate affairs chief, Yudy Rizard Hakim, said negotiations to resolve the bonds case would still go ahead.

“We have good faith [we can settle the bonds],” Yudy said.

When the trustee filed the petition, Bakrieland and the creditors were negotiating to restructure the equity-linked bonds. The debt papers, issued in March 2010 with an interest rate of 8.625 percent, were meant to mature in 2015. But creditors exercised an option that saw the bonds mature in March this year.

Claiming financial obstacles, Bakrieland said it would not be able to pay its obligations and, therefore, proposed the restructuring.

Under the proposal, according to Bakrieland president director Ambono Janurianto, the firm offered an up-front cash payment of $31 million with three years through 2016 to pay the remaining $124 million. It also proposed to change the equity-linked bonds’ status to secured from unsecured, using 600 hectares of land as collateral, and increase the interest rate. (Raras Cahyafitri)