When Indonesian conglomerate CT Corp started talks with lenders for a US$1.275bn loan in November 2013, it faced an uphill struggle. The country was beset by raft of macroeconomic problems, including weak growth, an outflow of foreign capital and a deteriorating currency.
With its business relying on rupiah revenues, increasing the company’s leverage ratio was a bold move; CT Corp was looking for underwriting commitments in the teeth of a currency crisis. Making it even more challenging was that it had already raised a US$750m three-year loan only eight months earlier.
Within weeks, however, CT Corp had lined up 13 mandated lead arrangers and bookrunners, which together prefunded the new US$1.275bn three-tranche borrowing in December.
The complex deal involved three separate loan agreements for three different subsidiaries, all with the aim of moving the company’s debt closer to its operating assets.
The refinancing was split into a US$275m three-year amortising tranche for holding company Trans Retail, a US$500m five-year amortising tranche for operating company Trans Retail Indonesia and a US$500m five-year amortising tranche for operating company Trans Media Corpora.
The aim of the reorganisation was to make each entity creditworthy on a standalone basis and unwind intercompany cashflow dependencies, while also realigning the security and loosening the covenants to give financial and operational flexibility for future growth.
The structure allowed for the opcos, Trans Retail Indonesia and Trans Media Corpora, to boost leverage to 5.5 times and four times, respectively, while leverage for holdco Trans Retail was set at seven times.
The deal had an equally complex syndication strategy, which needed three separate credit stories, while commitments were sought for at least two of the three tranches.
Pricing was also significantly tighter than that of outstanding loans. On a pro rata basis, the top-level all-in was 401.45bp, compared with 563bp all-in on the previous US$750m deal. Trans Media Corpora’s US$450m five-year loan of June 2011 paid top-level all-in pricing of 486.5bp.
Despite more aggressive terms – and the fact that domestic Indonesian lenders were not invited – the deal attracted 19 additional lenders in general syndication amid extreme volatility for the rupiah.
The loan was launched in mid-January and closed in late March, a period during which the three-month TAIFX, Taiwan’s interbank US dollar lending rate, hovered around 140bp before hitting a two-year high of 160bp.
The deal nonetheless gathered combined commitments of US$405m from 14 Taiwanese banks.
“CT Corp’s successful fundraising demonstrates the strong banking relationships we enjoy in the international markets and brings into focus a private sector, unlisted, unrated consumer story from Indonesia,” said Ashish Saboo, a director at CT Corp.
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