📒 Quick Take: Visi Media Asia’s Court Tussle
The media arm of Indonesia’s Bakrie Group allegedly tried to disenfranchise the voting rights of its private credit lenders.
An Indonesian court affirmed the rights of Visi Media’s private credit lenders to vote in its local in-court restructuring (PKPU) proceedings.
This is a test case on whether Indonesian debtors will be allowed to stick to their old playbook.
An Indonesian court has issued a second ruling that affirmed the rights of private credit lenders to vote in Visi Media Group’s local in-court restructuring (PKPU) proceedings.
Before the Central Jakarta Commercial Court’s decision, Visi Media’s PKPU administrators had tried to “disenfranchise” the voting rights of these lenders related to their USD 560 million claims, according to their legal advisor Kirkland & Ellis.
“This is a marked change from past cases in Indonesia where other international lenders and bondholders have seen their voting rights being disenfranchised in PKPU reorganization processes through similar tactics and arguments by insolvent Indonesian debtors,” Kirkland said in a press release dated 26 August.
One of the most infamous cases was Bakrie Telecom, whose bondholders were rejected when they tried to file claims against the onshore company undergoing PKPU, on the basis that they were creditors of the Singapore special purpose vehicle (SPV). This is a logic-bending argument because most of the bonds issued by offshore SPVs carry a guarantee from the parent company in Indonesia.
Bakrie Telecom’s tactics in late 2014 had a ripple effect on other Indonesian borrowers. A lawyer friend who advises offshore bond issuers once grumbled that the risks section in bond prospectuses became quite a bit longer thanks to Bakrie Telecom.
Fast forward to the present and Visi Media – which is also a part of Indonesian conglomerate Bakrie Group – could be another notable chapter. Bloomberg reported that the media company proposed to delay the final repayment of its debt principal owed to the group of private credit funds by as long as 30 years.
It’s too early to tell how the Visi Media vote will turn out, but investors are closely watching the case to gauge whether Indonesian debtors will be allowed to stick to their old playbook.