Gajah Tunggal, Southeast Asia's biggest integrated tire manufacturer, proposed late Friday an exchange of its outstanding $420 million 10.25% bonds which mature on July 21, 2010, for a new five-year bond with a step-up coupon structure.
This is effectively a proposed distressed debt exchange. According to its March 2009 accounts, Gajah Tunggal has just $21 million of cash, which is not enough to cover the $21.5 million owed on the semi-annual coupon payment date on July 21. That payment will be capitalised as principal and distributed on a pro rata basis to takers of the new bonds.
The plan is for the exchange to be a straight par-for-par swap with no hair-cut on the old...
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