When Indonesia’s CT Corp started talks with lenders for a US$1.275bn loan in November 2013, it faced an uphill struggle. Indonesia was facing a raft of macroeconomic problems, including weak growth, an outflow of foreign capital and a deteriorating currency.
With its business relying on rupiah revenue, lifting CT Corp’s leverage ratio was a bold move as it was looking for underwriting commitments amid a currency crisis. The fact that it had already raised a US$750m three-year loan only eight months earlier made the effort even more challenging.
Within weeks, however, CT Corp had lined up 13 mandated lead arrangers and bookrunners that, together, prefunded the new US$1.275bn three-tranche borrowing in December.
“CT Corp’s successful fundraising demonstrates the strong banking relationships we enjoy in the international markets and brings into focus a private sector, unlisted, unrated consumer story from Indonesia,” said Ashish Saboo, director at CT Corp.
The complex borrowing involved three separate loan agreements for as many different subsidiaries, all with the aim of moving the company’s debt closer to its operating assets. The refinancing was split into a US$275m three-year amortising tranche for holding company Trans Retail, a US$500m five-year amortising piece for operating company Trans Retail Indonesia and a US$500m five-year amortising portion for operating company Trans Media Corpora.
The revamp was meant to make each entity creditworthy on a standalone basis and unwind intercompany cash-flow dependencies, while also realigning the security and loosening the covenants to give financial and operational flexibility for future growth.
The structure allowed operating companies Trans Retail Indonesia and Trans Media Corpora to boost leverage to 5.5x and 4.0x, respectively, while leverage for holding company Trans Retail was set at 7.0x.
The loan had an equally complex syndication strategy, which needed three separate credit stories, while commitments were sought for two of the three tranches.
Pricing was also significantly tighter than that for CT Corp’s outstanding loans. On a pro-rata basis, the top-level all-in was 401.45bp, compared with 563bp on the previous US$750m loan. Trans Media Corpora’s US$450m five-year loan of June 2011 paid top-level all-in pricing of 486.5bp.
The loan was launched in mid-January and closed in late March, a period during which the three-month TAIFX, Taiwan’s interbank US dollar lending rate, stood at around 140bp before hitting a two-year high of 160bp. Still, the loan drew combined commitments of US$405m from 14 Taiwan banks.
To see the digital version of this report, please click here.