Pan Brothers' long-term issuer default rating (IDR) was downgraded to C from CC. Fitch Ratings to lower the rating because PBRX issuers have financial difficulties to pay off their loan obligations. This international rating agency also cut Pan Brothers' global bond rating by USD171 million due in January 2022 to C from CC with a fixed bond recovery rating at RR4. The rating downgrade follows the action of Pan Brothers which has entered into a standstill agreement with the bank not to take action action, which is in accordance with Fitch's definition for rating C. The standstill period has ended on 27 January 2021.
Therefore, the bank can request an accelerated payment of the syndicated debt amounting to USD138.5 million which matures on January 27. However, the company is in the process of extending the standstill period until February 12, 2021.
In addition, this integrated garment and textile issuer continues to negotiate with creditors to extend the syndicated debt period of USD138.5 million, which originally matures in January 2021 to the end of January 2023. .
Furthermore, in the standstill agreement, Pan Brothers must meet specific milestones when it continues negotiations for the finalization of the extension of the syndicated debt. Pan Brothers proposed a one-plus-one loan extension structure until the end of January 2023. Later, the extension for the second year from the end of January 2022 to the end of January 2023 depends on the company's ability to refinance or restructure global bonds in 2022 to a more mature maturity. long.
Fitch assessed that the long negotiations and short standstill period reflected Pan Brothers' weak liquidity position and limited access to alternative funding sources. Fitch sees that there have been several extensions to standstill, so a resolution to the company's capital structure can only be done through restructuring. For information, the debt that will mature in January 2021 is the result of a syndicated loan agreement on December 27, 2017.
At that time, the banks acting as the mandated lead arrangers and bookrunners were PT Bank ANZ Indonesia, PT Bank HSBC Indonesia, and ING Bank NV. Meanwhile, HSBC as the facility agent and PT Bank Permata Tbk as the security agent. Initially, the syndicated loan ceiling amount was USD110 million with an accordion of USD40 million.
The facilities are divided into two, namely tranche A with an interest rate of Libor + 2.25% and tranche B with Libor + 1.75%. Pan Brothers recorded a return of USD28.5 million in accordion in November 2018, bringing the total loan ceiling to USD138.5 million.