Fitch said that BTEL would likely default and have to restructure its US$380 million senior unsecured bonds due in May 2015, given the company's poor liquidity and uncertain earnings from operations.
BTEL, one of the companies of the politically wired Bakrie family, reported a massive setback in its financial performance in 2012 with net losses of Rp 3.13 trillion ($322 million). The company's revenue dropped by around 7 percent to Rp 2.97 trillion in 2012 compared to Rp 3.19 trillion in 2011. According to the company's financial report, its cash and cash equivalents stood at Rp 260 billion as of the end of December 2012.
BTEL will have to spend $21.9 million to pay the coupon on its $380 million bonds due in May 7.
Fitch stated that BTEL had failed to fund an interest-reserve account under its bond documentation -- which requires the company to maintain a minimum of one coupon payment at all times and to have at least two coupon payments of about $43.7 million in the account at least 30 days prior to the coupon date. "The balance in the account was only $8 million at the end of December 2012, rendering this an 'event of default' under the terms of the bond," Fitch said.
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