The integrated textile and garment issuer PT Sri Rejeki Isman Tbk (Sritex) stated that the US $ 350 million syndicated loan restructuring process is in the process of discussion and review with financial advisors and legal advisors. This was conveyed in the Sritex explanation letter to the Indonesia Stock Exchange on April 15, 2021.

Through a letter signed by Corporate Secretary Sritex Welly Salam, this issuer coded SRIL shares asked the IDX to provide space and time so that the company can reach the best decision for all parties.

"We also ensure that until now, the company still meets the financial covenants given by each of the company's creditors based on the financial reports as of December 31, 2020," said Welly.

As is known, Sritex is requesting a two-year tenor extension for a syndicated loan of US $ 350 million which will mature in January 2022. Efforts to extend this tenor began when Sritex sent a letter to the facility agent on November 2, 2020.

Then, on February 2, 2021, the Mandated Lead Arranger and Bookrunner (MLAB) consisting of Citibank, DBS, and HSBC requested an extension of the deadline for providing responses, from February 2, 2021 to March 1, 2021. This response time extension was a request from several lenders. because it requires additional time for the administrative process.

Then, on March 3, 2021, as many as 60% of syndicated lenders agreed to extend the loan tenor for two years. "It is confirmed that the US $ 205 million extension is in the administrative process in the form of documents and legalization with a plan to sign on March 19, 2021," said Welly.

However, on March 19, 2021, MLAB decided to postpone the signing of the tenor extension due to an unprecedented incident. According to Sritex management, the signing delay caused uncertainty for the company and its syndicated lenders.

With the signing delay and increasing uncertainty, Moody's Investors Service lowered Sritex's Corporate Family Rating (CFR) to B3 from B1 on March 22, 2021. Then, on April 9, 2021, Moody's again lowered Sritex's CFR from B3 to Ca with a negative prospect.

Moody's analyst Stephanie Cheong said the downgrade was in line with Sritex's announcement on April 3, 2021. In the announcement, Sritex said that some of the company's bank facilities were materially reduced and Sritex had appointed an advisor for the debt restructuring process.

"The rating reflects the significant uncertainty over the sustainability of Sritex's current capital structure and the risk that Sritex's challenging liquidity conditions could lead to accelerated payments of corporate liabilities in the near future," said Stephanie in her research.