A&O steps up restructuring drive with Indonesian deal

The Singapore office of Allen & Overy (A&O) has completed what is believed to be the largest restructuring for an Indonesian debtor since the economic crisis in 1997.

The firm is advising Bank of America as chairman of the steering committee of creditors to PT Indocement Tunggal Prakarsa, one of the leading cement producers in Indonesia. The transaction involves a debt restructuring of more than $1.16bn (£777.68m) of its debt and that of its subsidiary, PT Indo Kodeco Cement.

The deal follows the firm’s completion of the largest Slovak corporate turnaround, which closed at the end of November. On that, the firm advised ING Barings as chair of the coordinating committee of banks on the turnaround of steel producer VSZ.

The restructuring of PT Indocement was led by Singapore partner John Richards and is one of the first restructurings that sees all creditors receive a repayment of principal in full. Richards was assisted by associate Honor Irvine.

The deal involved the merger of three corporate entities under Indonesian law and releases the potential for a global cement company strategic investor to buy a proportion of debt and an equity stake.

Because that strategic investor was not secured, A&O had to put in place two sets of parallel restructuring terms, one to reflect the terms of a restructuring if an investor came in and one for if it did not. Then it added a legal mechanism allowing the restructuring to start on the first terms and end on the second set of terms if the strategic investment is made halfway through.

The A&O business reconstruction group has eight dedicated partners including heavyweights Gordon Stewart and Nick Segal in London. Head of the group Stewart led the Slovak VSZ deal, which began when the company defaulted on some of its credit facilities in late 1998. He was assisted by banking partner Richard de Basto.

Linklaters & Alliance and US firm Squire Sanders & Dempsey advised VSZ on the transaction.

In the past year in Asia the firm has advised the steering committee of bank creditors on the massive £5.6bn restructuring of Guandong Enterprises (Holdings) and its subsidiaries and Nam Yue Group and its subsidiaries. It also advised Bank of America as chairman of the steering committee of creditors on the restructuring of the outstanding debt and obligations of PT Mulia Industrindo and its subsidiaries.