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.