Case Study
Project Northstar
July 2017- Type of Case :
- Debt Restructurings and Turnaround Management (PKPU)
- Title :
- Integrated Poultry
- Status :
- Closed July 2017
- Value :
- IDR 3.2 trillion
PROJECT OVERVIEW
- Our Client is an integrated poultry group based in West Kalimantan.
PROJECT ISSUES
- A series of external competition driven shocks combined with an ill-fated expansion into Java pushed our client, a West Kalimantan integrated poultry Group, into default on its outstanding debts. After bilateral discussions with its creditors on restructuring its debts failed, two of its creditors filed a PKPU petition in the commercial court against the Client.
- Prolonged operational issues and competitive pressure on margins stripped working capital from the Group, limiting operations. The need for additional working capital became a critical issue in restructuring negotiations.
- Stakeholder-creditors consisted of parties with differing interests, which complicated the negotiation process. This was further complicated by the sale by a major bank of its debts in the Group to a distress fund.
WHAT WE DID
- Assess the economics of the business model and implemented strategies of the Client, and identify the risks of such strategies to the Client’s financials going forward.
- Develop major deleveraging structure through debtor-supervised sale of non-operating assets and the core business.
- Set monitoring structure for the implementation of the agreed terms, including the establishment of Creditor Sterring Committee which oversees the use of cash of the Client and asset disposals progress.
- Develop the commercial section of the Composition Plan, and coordinate closely with the legal counsel on the development of the legal section.
PROJECT OUTCOME
- The Composition Plan was approved by the creditors including the sale of non-operating assets and the core business to settle the outstanding debts with any short fall to be written off.
