Strategic Considerations: Lippo Malls Indonesia Retail Trust (LMIRT) has started approaching holders of its USD notes due 2024 and 2026 to conduct an informal identification exercise and sound them out on the likely terms for a potential exchange offer. The Singapore-listed Indonesian shopping mall operator is proposing three preliminary options to address the maturity of its USD bonds, all of which involve some upfront cash payment. The informal discussion with holders of LMIRT’s outstanding USD 138.4m 7.25% bond due June 2024 and USD 114.7m 7.5% bond due 2026 come at a time when the trust is in talks with lenders of its SGD loans to replace the pledge of its Sun Plaza mall with six other malls in Indonesia to pave the way for a new IDR-denominated loan.
- LMIRT has engaged CIMB Bank, Shanghai Pudong Development Bank, BNP Paribas, and Deutsche Bank to explore potential liability management exercises for its USD bonds
- LMIRT needs to pay consent fees and make loan prepayments totaling SGD 25m (USD 18.4m) for its SGD loans this year, and SGD 22m (USD 16m) in amortization payment
Lippo Malls Indonesia Retail Trust (LMIRT) this week started approaching holders of its USD notes due 2024 and 2026 to conduct an informal identification exercise and sound them out on the likely terms for a potential exchange offer, according to three persons familiar with the matter.
Four banks recently appointed by the Singapore-listed shopping mall operator have approached several bondholders to identify the size of their debt holdings and gauge their interest in a potential exchange offer, the three persons said. As reported, LMIRT announced last week that it had engaged CIMB Bank, Shanghai Pudong Development Bank, BNP Paribas, and Deutsche Bank to explore potential liability management alternatives for its USD bonds.
LMIRT did not respond to a request for comment by press time.
LMIRT is proposing three preliminary options to address the maturity of its USD bonds, according to the persons.
The first option proposed informally is to partially exchange LMIRT’s outstanding USD 138.4m 7.25% bond due June 2024 for additional bonds to be issued under its existing USD 114.7m 7.50% notes due February 2026, plus an upfront cash payment of 50 cents on the dollar.
The second option involves exchanging the 2024s for new notes due 2026 that would mature after the existing February 2026s, plus an upfront cash payment of 50 cents on the dollar as well as an unspecified coupon step-up.
The third option informally proposed would involve the exchange of both sets of USD notes into new notes that would mature in three years, according to the persons. LMIRT guided a potential upfront cash payment of 42 cents per dollar for the 2024s, and 10 cents per dollar for the 2026s under this scenario, they added.
LMIRT is currently seeking consent from the lenders of its SGD-denominated loans to replace the pledge of its Sun Plaza shopping mall with six other malls in Indonesia, to pave the way for signing a fresh IDR-denominated loan that could be used to help address the maturity of its USD notes, as reported.
Despite the fresh IDR-denominated loan that is currently in process, LMIRT will likely still have a funding shortfall as it has to pay consent fees and make upfront prepayments, as well as additional prepayments for its SGD loan facilities, amounting to SGD 25m (USD 18.4m at today’s exchange rate) this year, on top of an SGD 22m (USD 16m) of amortization scheduled for November this year.
LMIRT’s outstanding USD 138.4m 7.25% bond due June 2024 was last indicated at 93.5 bid as of Tuesday (23 April) evening, while the USD 114.7m 7.5% bond due February 2026 was last indicated at 81 bid, according to ICE Data Services.