JAKARTA (TheInsiderStories) – Bondholders of PT Modernland Realty Tbk (IDX: MDLN) approved the debt restructuring of the Indonesian developer with a principal amount of Rp150 billion (US$10.49 million). The pproval was obtained on July 14, as stated by the company in the disclosure of information the bourse on Thursday (07/16).
The agreed debt restructuring scheme is a change in interest rates from the original coupon 12.5 percent to 10 percent per year and the due date from July 7, 2020 to June 7, 2021. In addition, the change in collateral value rises to 200 percent of the principal amount of the bond with the addition of collateral over the company’ land located in Tangerang, Banten.
Related to the developer issues, Moody’s Investor Service has downgraded Modernland Realty rating from BBB to Caa1 or has high credit risk. The agency also downgraded the senior debt securities issued by its unit, Moderland Overseas Pte. Ltd., and JGC Ventures Pte. Ltd., became Caa1 from the previous BBB.
Since July 7, the issuer shares have been suspended by Indonesia Stock Exchange. Its known that the company postponed the payment of the bond principal due on that date, which raises doubts about the its business continuity. The regulator decided to suspend the share and the bond trading of the developer in all markets starting July 8 until further announcements.
According to the agency, unless Modernland is able to get external funding, the company will not have enough funds to repay maturing bonds and meet interest payments of around Rp250 billion every half year on foreign bonds worth $150 million with a coupon of 10.75 percent which will fall maturity in August 2021 and $240 million have a 6.95 percent coupon due in April 2024.
If this problem is not resolved within that period, default on the US Dollar bond agreement will result. The agency said that company’ rating could be lowered further in the event of default, including formal debt restructuring, Moody’s estimates that losses to corporate creditors would be higher than indicated by the Ca.
This developer firm has been established for more than 30 years and has a project profile, especially in Jakarta and surrounding areas. The three most substantial corporate projects are Kota Modern, Modern Hill and Modern Park. Kota Modern was founded in 1986 in Tangerang City and became the first corporate housing project.
The project currently being developed is Jakarta Garden City with an area of 270 hectares. The project is being developed by the company through the establishment of a joint venture with Keppel Land Ltd., Singapore, as an integrated eco-township in Cakung District, East Jakarta.
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