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Indofood fails to get support for early redemption of 10 3/8% notes
New York, Jan. 7 - PT Indofood Sukses Makmur Tbk said it failed to get support for the early redemption at a premium of the $280 million of 10 3/8% guaranteed notes due 2007 issued by Indofood International Finance Ltd.
A reconvened meeting to consider the proposal was held on Friday. The company had previously failed to achieve a quorum at an earlier meeting on Dec. 23.
Indofood announced the proposed early redemption on Dec. 2 following a disagreement with the note trustee over whether it can exercise the tax call.
The company had wanted to redeem the bonds at a price of 102 plus accrued interest on Jan. 7 or, if the there is no quorum for a meeting of bondholders on Dec. 23, at a price of 101 plus accrued interest on Jan. 13.
As originally announced, Indofood believes it is entitled to exercise the tax call on the bonds following the termination of the tax treaty between Indonesia and Mauritius, effective Jan. 1. That change would increase the withholding tax imposed by Indonesia on payments to Mauritius residents to 20% from 10%.
But the company added that the trustee for the notes, JPMorgan Chase Bank NA, London Branch, disagrees.
The two sides disagree over whether there are "reasonable measures" the issuer can take to avoid the withholding, Indofood said.
As a result, Indofood was proposing to redeem the bonds at a premium, a change that would require bondholder approval.
If it does not obtain approval, Indofood previously said it would take the issue to court in England for a declaration that it is entitled to exercise the tax call. Should it obtain such a ruling, the tax call will be at par.
Jakarta, Indonesia-based Indofood makes instant noodles.
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