The Bakrie Group has been accused of failing to make two interest payments and is thought to be showing signs that it will continue to evade its obligations, under laws set by Singapore, which issued the bond.
The accusers – which include Universal Investment Advisory, Vaquero Master EM Credit Fund and Trucharm – hold a combined 25% stake in the outstanding bond, maturing in May 2015, and claim that PT Bakrie Telecom failed to pay interest due in November 2013 and May 2014.
Bakrie Telecom Pte, PT Bakrie Telecom, PT Bakrie Network and PT Bakrie Connectivity are being sued by the investors in a New York state court, Reuters reports.
“Defendants have acknowledged that the default will continue and no further interest payments will be made while the company confidentially negotiates with its chosen ‘steering committee’ and a restructuring of the company and the note obligations is effectuated,” the filing from the investors said.
“Accordingly, there is high probability that defendants will exacerbate the default and fail to make the next payment due in November 2014.”
Due to its weak financial position and liquidity, market watchers deem it unlikely that PT Bakrie Telecom will be able to refinance the $380 million bond, with some believing that the company’s only option is to make a deal.
Bakrie Telecom is allegedly considering a merger with Smartfren Telecom, given that the two companies use similar technology, but Fitch analyst Nitin Soni told Reuters that M&A activity “looks difficult as [Bakrie Telecom] is continuously losing subscribers and posting weaker financial performance every quarter”.
