Lippo Karawaci’s bond buyback will broaden funding diversity and reduce foreign-currency risk, Fitch noted, contingent on the buyback being accepted. Lippo had launched a tender offer and consent solicitation yesterday for its $405mn 8.125% 2025s and $417mn 6.75% 2026s. Regarding the tender offer, holders who tender their notes before the early deadline of January 20 will receive $870 per $1,000 in principal for the 2025s and $770 for the 2026s. They will also pay an additional early instruction fee of $5. Those who tender after the early deadline will receive $840 and $740 per $1,000 in principal with a $1 instruction fee. The final deadline is February 1. Regarding the consent solicitation, Lippo is seeking consent to amend the indenture of the two bonds to allow the completion of a loan facility. Here, the 2025s require a bondholder majority to pass the consent solicitation, while the 2026s require 66% consent. The Indonesian company said that the buyback will help it achieve a more sustainable cashflow, optimize its capital structure and extend its debt maturity profile.
Fitch notes that Lippo’s move as opportunistic, and does not treat it as a distressed debt exchange (DDE). The rating agency notes that the company will not default if the buyback is unsuccessful, as it has sufficient liquidity over the next one year.
Its 8.125% 2025s and 6.75% 2026s are up 4.6 points and 6 points respectively since the beginning of the week, to trade at 88.87 and 80.5, yielding 14.71% and 13.49% respectively.