Milbank Tweed Hadley & McCloy LLP has acted for the underwriters in a US$250m bond offering for Indonesian telecom operator PT Mitra Global Telekomunikasi Indonesia (MGTI).
Singapore head David Zemans, together with Hong Kong-based partner Doug Jones led the firm's team on the deal, which completed on 15 September and which represents the first dollar bond from Indonesia in six months.
UBS AG and DBS Bank Ltd were the joint lead managers on the deal, which market commentators have suggested indicates a sign of recovery in the Asian yield market.
The US$250m notes were issued through MGTI Finance Company Ltd., a finance subsidiary located in the Cayman Islands, and guaranteed by MGTI. The notes were issued in two series: US$105m 7.000% guaranteed secured notes due 2007, with a straight line amortizing structure and quarterly payments; and US$145m 8.375% guaranteed secured notes due 2010. In addition, US$20m 9.000% guaranteed secured notes due 2011 were issued to an affiliate of MGTI in exchange for the cancellation of a shareholder loan.
The structure of the bond security relates to the sources of repayment. Revenues from KSO IV are paid by a division of PT Telkom that operates the fixed-line network located in KSO IV. In the event that KSO IV fails to make the payments under the KSO agreement, PT Telkom must make up the shortfall.
Milbank Tweed meanwhile has been involved in the various financings for MGTI completed in 2004, including the US$215m amortising syndicated loan to finance PT Alberta Telecommunication's purchase of MGTI in January 2004.
Zemans said: "This US$250m bond offering was used to refinance the syndicated loan. The bonds are secured by a monthly payment from a division of Telkom to MGTI. This is another highly structured transaction that Milbank is pleased to have played a major role in."
MGTI is one of the five foreign owned KSO joint ventures established with state-owned PT Telekomunikasi Indonesia Tbk (Telkom) in the mid 1990s to develop fixed line phone services throughout Indonesia.
Alberta Telecommunication purchased MGTI in January of this year and amended the original KSO agreement with Telkom. Under the terms of the new agreement, MGTI receives a fixed revenue stream from KSO IV, but has no obligation to contribute to operating expenses or capital expenditure.