Two subsidiaries of Indonesian telecom services provider Indosat -- Indosat Finance Company and Indosat International Finance Company -- have launched separate and independent tender offers to buy the remainder of Indosat Finance's 7.75% bonds due in 2010 and Indosat International's 7.125% bonds that are set to mature in February 2012. The bonds have $234.7 million and $109.4
million left outstanding, respectively.
Aside from the conditional tender, the transaction also includes a consent solicitation and a new issue of senior unsecured debt to help pay for the tender.
The new issue will be denominated in US dollars and is expected to be of benchmark size, which implies a deal around the $500 million mark. The borrower is looking for a 10-year maturity and the bonds will be issued through its Indosat Palap subsidiary with Indosat as guarantor.
"The tender is conditional upon a successful new issue -- no issue no tender," explained one banker on the transaction. However, with the new 2020 bonds set to price late next week, this is not expected to be a problem.
Indosat went on the road yesterday and will hold a series of investor meetings in Singapore, Hong Kong, London and the US. It is expected to finish on Wednesday with the pricing expected before the end of next week. The proposed notes have received a BB rating by Standard and Poor's.
The company is offering to pay $1,021.875 per $1,000 principal amount for the 2010 notes plus accrued and unpaid interest. The total consideration includes an early tender premium of $2.00 per $1,000 principal amount and a consent payment of $0.50.
Holders of the 2012 bonds will receive $1,038.125 per $1,000 principal amount, which includes an early tender premium of $2.50 per US$1,000 principal amount. Again, any accrued and unpaid interest will be added to that amount.
This suggests a total outlay of $355 million excluding interest, should the bonds be tendered in full.
To receive the early tender premium bondholders will need to tender the bonds before the early tender deadline, which has been set for 5pm New York time on May 24.
The tender offers expire on June 9.
Meanwhile, Indosat is seeking consent from the 2010 bondholders to reduce the minimum redemption notice period from 30 days to five business days; and to release Indosat International as guarantor of the 2010 notes. Bondholders who tender their notes will be deemed to have accepted those amendments.
Citi, DBS, Deutsche Bank (Singapore), HSBC and RBS are lead arrangers for the tender and consent solicitation, as well as for the new issue.
Indosat, which is the second largest mobile operator in Indonesia, last came to the international debt markets in August 2009 with a $315 million eight-year buyer credit facility. The lead arrangers for the loan were RBS and HSBC.
