Gajah Tunggal proposes $420 million bond exchange

The distressed Indonesian tire manufacturer is the latest Asian company to seek a solution to its liquidity problems.

Gajah Tunggal, Southeast Asia's biggest integrated tire manufacturer, proposed late Friday an exchange of its outstanding $420 million 10.25% bonds which mature on July 21, 2010, for a new five-year bond with a step-up coupon structure.

This is effectively a proposed distressed debt exchange. According to its March 2009 accounts, Gajah Tunggal has just $21 million of cash, which is not enough to cover the $21.5 million owed on the semi-annual coupon payment date on July 21. That payment will...

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