ASTRA INTERNATIONAL
Crafting a Solution
OVERVIEW
Astra is one of the largest most successful companies in Indonesia today. In 1998 the Company had over 35 operating subs of which 22 defaulted following the Asian Financial Crisis. The group combined had over $2.5 Bn of debt. The Advisory team led by Mr. Riebe restructured the debts of the 17 largest of these companies in a period of 16 months. Long before any other major company achieved this.
The IDR depreciated over 80% in early 1998 and for a company that imported significant proportions of many of their products this caused sales to fall up to 80%. When combined with the collapse in market liquidity and the sentiment the Group companies faced a catastrophic situation.
Astra the HoldCo was also the auto dealership for the various subsidiaries and had debts of US$1.2 Bn. The Group was beset by an inability to raise funds, no liquidity and regulatory burdens including recapitalizing the Group's bank ahead of servicing its debts. Given the dislocations caused by the crisis and the resulting recession, lender fear was elevated and the company’s debt collapsed to roughly 20% of the face.
SOLUTION
Stabilize the Business, create liquidity, and engage with a diverse creditor group of over 100 local and international banks and bondholders. Create a workable template to allow greater control for the parent and the means to ensure excess money could flow to it. Restructure the debt to maximize corporate value so the largest shareholder could sell its stake (40%).
APPROACH
The FA team worked closely with over 80 individual creditors in a myriad of facilities many with multiple Group exposures to develop not only a plan for Astra but one replicable across all defaulted Group companies to speed up a time consuming process.
The Plan created was built around minimizing near term cash obligations; giving management high levels of operational control (to minimize disruptions) in return for defined asset sales over a multi-year period of time to raise capital and pay down debts.
The HoldCo restructuring deal closed in 9 months long before any other large company in Indonesia had managed to. All defaulted subs closed within another seven months of that date.
OUTCOMES
IBRA sold their 40% equity stake in Astra in 3/00 for US$506 MM. This implied an EV of US$3.7 Bn versus an implied value for the company of roughly US$600 MM in 10/98.
