Bondholders in rift showdown

The real Title is : Shrimp producer CP Prima, bondholders in rift showdown.

Publicly listed shrimp producer PT Central Proteinprima (CP Prima) is currently entangled in a dispute with its overseas bondholders, represented here by top capital market analyst Lin Che Wei.

Through his newly set up consultancy Independent Research & Advisory Indonesia (IRAI), Lin urged the CP Prima management on Friday to top up the company's declining collateral and freeze the upcoming rights issue plan.

He said CP Prima was required to inject cash to keep its collateral pledged for the bonds within the favorable value. Bondholders have been pledged 70 percent of the company's shares, whose value plunged to Rp 50 (less than 5 US cents) on Friday's trading from the original price of Rp 600 cited in the bondholder contract. 

CP Prima, through Singapore-based shareholder Red Dragon Pte. Ltd, issued bonds worth US$200 million in June 2007 with a coupon rate of 2 percent and a maturity period of 2010.

However, due to the stock market rout in October, which trimmed the share values of most local companies, CP Prima was required to pay cash to bondholders to keep the value of its pledged shares intact.

CP Prima, has been declared in default by bondholders since October," Lin said at a press conference, adding CP Prima's debt-to-equity ratio had reached an alarming level.

He refused to name the bondholders, saying only they were all foreign-based investors. But a document distributed by CP Prima shows the bondholders include well-known financial companies Morgan Stanley, Marathon Global Equity Master Fund and Highbridge Asia Opportunities Master Fund.

He also said the bondholders were against the company's plan to sell additional shares during the upcoming rights issue, as such a move would dilute the share collateral. 

He claimed the failed rights issue in December was carried out based on "bad intentions", because the management had not sought prior approval from bondholders. 

The Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) annulled CP Prima's shareholder meeting that approved the December rights issue plan because the meeting failed to meet the required 50 percent of shareholders. 

The rights issue in December was estimated to be worth Rp 1.75 trillion ($152.25 million), with CP Prima issuing 17.5 billion new shares.

CP Prima plans to hold another shareholder meeting soon to approve another rights issue plan. 
In response to Lin's allegation, CP Prima corporate communications director Rizal Shahab, who attended Lin's press conference, said Lin's attempt to prevent the upcoming rights issue was part of the bondholder scheme to take over the company in a hostile manner. 

"I know who is behind you *Lin*. They're all hedge funds," a furious Rizal told Lin before storming out of the conference venue. 

Rizal explained the rights issue was done merely to help improve the company's debt-to-equity ratio. 

He also accused Lin of using his political clout to influence Bapepam to kill the December rights issue. But Lin denied the allegations. 

"How could I influence Bapepam? It'd be like a lieutenant influencing his general - it's impossible." Lin refused to confirm whether the bondholders were keen to settle the dispute in court.

Source: Ika Krismantari , The Jakarta Post , Jakarta | Sat, 03/28/2009 1:42 PM | Business