Distressed Firm Sritex Is Said to Pause Dollar Loan Payments

(Bloomberg) -- Indonesia's biggest listed clothing company has paused payments on a dollar loan as it prepares a debt restructuring proposal, a person familiar with the matter said.

PT Sri Rejeki Isman, known as Sritex, intends to maintain the pause until it submits the restructuring plan to lenders which it expects to do by the week starting Aug. 9, the person said, asking not to be identified because the details are private.

Joy Citradewi, head of corporate communications, said in response to Bloomberg questions that the company was preparing a debt restructuring proposal but declined to elaborate on further details.

Shipments of Indonesian clothing products fell 17% last year and new lockdowns in major export destinations will add to the burden for the industry. Sritex rival PT Pan Brothers, the second-biggest listed apparel firm, is also seeking to extend the maturity of a dollar loan.

Read: Grim Outlook Deepens for Clothing Firm Debt: Indonesia Credit

Sritex has fallen into distress in credit markets, where its notes are the worst-performing Indonesian corporate dollar securities this year.

The loan was announced in 2019 with an initial size of $350 million and a 2022 maturity. Sritex said last month that a scheduled signing of an extension of the maturity on the facility had been delayed.

Sritex Corporate Secretary Welly Salam said in a filing Thursday in response to a query from the stock exchange about the dollar loan that the company was still meeting the financial covenants required by each creditor.

The manufacturer said earlier this month that it appointed Helios Capital Asia and Assegaf Hamzah & Partners as representatives in a debt restructuring process.

Assegaf Hamzah referred questions to Helios Capital when contacted by Bloomberg News, citing Helios as the main contact for such queries. Helios Capital Asia Managing Partner Hadi Cahyadi declined to comment.

Sritex hopes lenders won't take legal action against the payment pause because that may encourage bondholders to ask the firm to accelerate payments on the dollar notes, the person said. The company plans to hold a separate meeting with the bondholders to explain the situation.

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