Case Study
Project PKPU Namasindo
July 2018- Type of Case :
- Debt Restructurings and Turnaround Management
- Title :
- Namasindo Group Debt Restructuring via PKPU
- Status :
- Closed July 2018
- Value :
- IDR 5.2 trillion
PROJECT OVERVIEW
- Namasindo Group is the largest Indonesian bottle plastic manufacturer, engaged in the production of gallon bottles, plastic bottles, plastic cups, and caps/closures for the bottles water industry.
- Overleveraged capital structure and past poor investment decisions has made the Group’s liquidity to service its debt declined significantly. The majority debt holders included state and private owned banks and distressed debt funds.
- Suppliers of the Groups filed 3 PKPU cases in Jakarta Commercial Courts, AJCapital was court appointed independent financial advisor to find a workable debt restructuring plan and turn around management plan for the Group and its creditors
PROJECT ISSUES
- Heavy requirement of working capital and volatility of its raw material component, combined with significant uncollectible receivables, has constraint the Group’s liquidity and working capital.
- Creditors with completely differing interests - between state owned banks and distressed debt funds – complicated the negotiation process.
WHAT WE DID
- We conducted a due diligence on the existing loans and security agreements as well as on the Group's financial statements to assess its financial position and performances.
- We reviewed the Group’s business model, financial, and key drivers of the business, to construct a financial model as the basis to build the restructuring plan.
- Formulated and recommended alternative recovery options available to creditors. The work we have done includes: (i) a stress-test on the recovery options alternatives; (ii) a scenario analysis on the various recovery alternatives; (iii) a sensitivity on the Group’s recoverability value, and (iv) consideration of the settlement strategies, proposed values, and overall economics to the secured, unsecured creditors and shareholders.
- We ensured that certain control and governance provisions are proposed, negotiated and incorporated into the restructuring plan.
- Conducted coordination / negotiation management during the PKPU process between creditors and the Group.
- Together with the Group’s legal counsel, we wrote the Restructuring Agreement that was voted by the creditors in the court.
PROJECT OUTCOME
- The composition plan to restructure IDR 5.2 trillion debt was accepted and voted favorable by the Group’s creditors and ratified by the Jakarta Commercial Court.
- Creditors agreed to accept option to convert up to IDR 1.8 trillion into Group’s equity.