Berlian Laju Tanker to halt debt repayments

By Giok Manna

Amid falling freight rates, PT Berlian Laju Tanker, Indonesia?s biggest oil and gas shipping firm which is listed on Indonesia and Singapore Exchanges, said that it would temporarily stop servicing debts to allow it to review its financial position and arrangements.

"The company has decided to temporarily cease repayments on all of the company's bank loans and bonds and payments on ship leases and on similar obligations of its other subsidiaries, save for PT Buana Listya Tama," it said in a filing. Berlian Laju said the decision follows a covenant breach on a loan granted to a Berlian Laju subsidiary, under which Berlian Laju is a guarantor. The scheduled principal payments that are due in the current financial year are estimated to be in the region of US$418 million.

Freight rates have fallen sharply in recent months, caused in part by a surplus of vessels and global economic slowdown. ?The global economic slowdown combined with the rapid global fleet growth of the past few years resulted in lower freight rates, which combined with higher bunker fuel costs as well as other operating costs have significantly impacted the company?s business and financial position,? President Director Widihardja Tanudjaja said.

The company said it remains committed to carrying on with its normal business and operations, with the highest priority being to servicing the Group?s obligations to its suppliers and trade creditors, in respect of whom the standstill is not applicable.

It has appointed FTI Consulting as its financial advisor to carry out the assessment and to assist in determining the financial position of the company. It has also requested a suspension on the trading of its shares in both Singapore and Jakarta.

Editing by Dadan Wijaksana