Indonesian company Indofood International Finance has won its appeal for the early redemption of US$280m Eurobonds due 2007.
The UK Court of Appeal has officially confirmed that it has ruled in favour of the appeal from the High Court of Justice, according to Indofood.
The company filed proceedings in the UK High Court in February 2005 for a declaration as to its right to an early redemption of the Eurobonds.
UK High Court proceedings arose following the termination of the Indonesia – Mauritius Tax Treaty from 1 January 1 2005, which resulted in an increase in the withholding tax rate in respect of interest payments after this.
Indofood has stated it received two strong legal opinions from eminent Queen´s Counsel advising unequivocally that Indofood had a right to redeem, there being no reasonable measures available to avoid the increased withholding tax obligation. In those circumstances, Indofood said it was perfectly entitled to exercise its right to redeem the bonds, and was under a fiduciary duty to do so, in the interests of the company and the investing public.
Indofood International Finance, a wholly owned subsidiary of noodle maker PT Indofood Sukses Makmur Tbk, has concluded transactions for consensual “buy back” of US$30m and US$280m Eurobonds totalling a principal amount of US$158.33m, thus leaving an outstanding balance of US$151.67m.
Indofood said it now intends to take steps to exercise its right to redeem at par the remaining Eurobonds.
Prior to proceedings, Indofood held meetings with the bondholders in Singapore and, as a gesture of goodwill, offered to pay a premium of 102% to Indofood´s bondholders at a first meeting and a reduced premium of 101% if the meeting were adjourned. The first of the meetings was inquorate and had to be adjourned, but more than 75% of bondholders who attended, and voted by proxy at the meeting, were in favour of redemption at 102%.