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Indofood gets favorable ruling from U.K. Court of Appeal on 10 3/8% eurobond redemption
By Angela McDaniels
Seattle, March 3 - PT Indofood Sukses Makmur Tbk. received a favorable ruling from the U.K. Court of Appeal that said the company may redeem its 10 3/8% eurobonds due June 2007 at par, according to a company news release.
Indofood said it has repurchased $158.33 million of the bonds, which were issued by Indofood International Finance Ltd., and will now take steps to redeem the remaining $151.67 million outstanding at par.
The court proceedings began after the termination of the Indonesia-Mauritius tax treaty effective Jan. 1, 2005, a change that increased the withholding tax rate on the bonds.
Under the trust deed for the bonds, Indofood said the change entitled it to redeem the bonds at par. The trustee for the notes, JPMorgan Chase Bank NA, London Branch, disagreed.
As a "gesture of goodwill," Indofood offered to redeem the bonds at 102% of par, subject to approval by bondholders, or 101% of par if a second meeting had to be held. The first meeting did not achieve a quorum and had to be adjourned.
In August 2005, the U.K. High Court ruled that Indofood did not have the right to redeem the bonds at par, and the Jakarta, Indonesia-based instant noodle maker appealed the decision.
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