Protecting Paiton
On Valentines Day 2003, P.T. Paiton Energy (Paiton) and its lenders
renewed their vows to live happily ever after through the closing
of a landmark $1.73 billion debt restructuring. Integral to the
closing was the funding of a $381 million term loan by the
Export-Import Bank of the United States (US Ex-Im), a significant
achievement for Paiton and a vote of confidence for Indonesia's
economic reforms.
The restructuring of Paiton is a case study in patience and consensus-building among a large and diverse group of stakeholders that includes three foreign equity sponsors, four Japanese and US governmental agencies, a syndicate of commercial banks, bondholders, third-party fuel chain counterparties, an EPC contractor consortium and, of course, P.T. PLN, the offtaker and wholly owned vehicle of the Government of Indonesia. The success of the restructuring hinged on each of these stakeholders agreeing to accept its equitable amount of burden to ensure the on-going viability of Paiton and thereby ensure adequate supplies of electricity to the Java-Bali grid. As a result of this burden sharing, the restructured deal should demonstrate enhanced resilience of the project in the face of any future external shocks.
The closing of Paiton's debt restructuring marks the end of a tortuous five-year saga that began with the onset of the macroeconomic crisis in Indonesia. This article will briefly describe the history of Paiton and touch upon the pragmatic and coordinated process that has led to this groundbreaking accomplishment.
From closing to crisis
Back in the mid-1990s, Indonesia was a darling of the IMF and the community of debt and equity investors. GDP growth was high and electricity demand was expected to grow at greater than 10% per annum on the Java-Bali grid. PLN needed power generation...and fast! The Government also determined that it did not want to pay for all of that generation with its sovereign credit.
Paiton, a 1,230MW coal-fired independent power project (IPP) in East Java, was first off the blocks. The Project was tendered in 1991, reached agreement with PLN and the Government on a Power Purchase Agreement (PPA) in 1994 and achieved financial closing in April, 1995. At the time, Paiton was the largest IPP to be financed on a project-financing basis in a developing country and a model for other IPPs in Indonesia. Paiton's financing relied heavily on direct loans and political and commercial risk insurance and guarantees from governmental agencies including The Export-Import Bank of Japan (now Japan Bank for International Cooperation, JBIC), the Overseas Private Investment Corporation (OPIC), the Ministry of Trade and Industry of Japan (now Nippon Export and Investment Insurance, NEXI) and US Ex-Im. Under coverage from these agencies, directly and indirectly, a large syndicate of commercial banks provided construction and term loans. Three of the Project's sponsors, affiliates of Edison Mission Energy, Mitsui & Co., Ltd. and General Electric Capital Corporation, committed a finite amount of contingent equity to support completion of the project. The financing structure was augmented in 1996 when a syndicate of US bondholders provided funds on the basis of investment grade ratings from two major US rating agencies.
The financing closed with certain risks not unusual to mid-1990s IPP project financings in Asia, among them:
? A Step-Down Capital Cost Recovery Tariff: Since export credit agencies must follow the ?OECD Consensus? regarding tenors and interest rates, the loans were scheduled to amortize over twelve years from the start of commercial operations. To ensure adequate debt service coverage ratios, as well as an equity return that took Indonesian country risk into account, the capital cost recovery portion of the tariff had a step-down feature. PLN had agreed to a high capital cost recovery tariff over the first twelve years of the PPA that reduced by about half during the remainder of the thirty-year PPA term.
? Foreign-Exchange Indexing: Owing to the US dollar loans and equity costs, as well as construction costs and certain offshore operations and maintenance expenses, Paiton's tariff (as well as that for most Indonesian IPPs), while denominated in Indonesian Rupiah, was largely indexed to address fluctuations in the value of rupiah vis-a-vis the dollar.
? Long-Term Coal Supply with Dedicated Reserves: The Government had required Paiton to utilize Indonesian coal for the Project. The Government also required that Paiton's plant perform to environmental requirements far more stringent than applicable to PLN's plants. This required Paiton to find and use low sulphur, low ash, sub-bituminous coal from Kalimantan.
At the time of closing, however, the Indonesian coal industry was in the early stages of development. Pursuant to the PPA, Paiton was responsible for the ?safe, adequate and reliable? supply of coal. Quite logically and consistent with standard project financing practice, Paiton's lenders insisted on a secure ?fuel chain? including dedicated reserves, stockpiles at various points on the chain and a transportation strategy involving long-term contracts with third parties. As a result of this coal chain, the price of coal that Paiton was paying was substantially higher than what PLN was paying to fuel its own plants, which were not required to maintain such stringent requirements. Nevertheless, under the PPA, PLN was obligated to reimburse Paiton for the entire fuel bill.
These components drove the tariff to a level higher than PLN was receiving from its customers. As in the Philippines, where a crash power generation program had alleviated 12-hour brownouts, many argued at the time that it was worth paying a high price for power to avoid the political and economic consequences of having industry shut down and the lights go out.
The Rupiah crashes
Although perhaps not as dramatic as the assassination of John F. Kennedy or the first steps on the moon by Neil Armstrong, many in Asia will remember what they were doing when word first came that Thailand had abandoned its peg of the Thai Baht to the dollar. In the ensuing months, watching Bloomberg as the currencies and stock and bond markets of many of the heretofore economic dynamos in Asia fell, was a common pastime. The Rupiah during that period fell from approximately 2,450 to the dollar to, at worst, 17,000, before recovering to levels in the 8,000 to 10,000 range. (The current rate is around 9,000.)
Naturally, this 70+% drop in the value of the Rupiah resulted in a sharp recession in the Indonesian economy. The value (in dollar terms) of PLN's invoices to its customers dropped to about 1.7 cents/kWh. It was very clear to all of the Indonesian IPPs that PLN would have trouble paying their dollar-indexed tariffs. The Government of Indonesia quickly announced the postponement or cancellation of many IPPs. It and PLN further determined that they would pay for IPP power only at a rate equivalent to 2,450 Rupiah/dollar, the rate the Government had used for its 1997/1998 budget.
At this time of macroeconomic crisis, Paiton's lenders and sponsors made their first critical decision ? to complete construction of the plant. All of these investors correctly (as it appears now) determined that a completed plant had much more value than a rusting hulk. This patience and foresight in the midst of extreme uncertainty set a strong benchmark for future decision-making by the group.
Commercial operations occurs ? no dispatch
When commercial operations occurred in mid-1999, the worst fears of sponsors and lenders were realized when PLN refused to take the power from Paiton's plant or to pay for it, despite Paiton's making such power available as provided in the PPA.
While Paiton and its Sponsors could have taken the route of immediately challenging PLN's action through international arbitration, as some IPPs did, Paiton's sponsors and lenders, most of whom have other business interests and a longer-term view of Indonesia, again patiently agreed to work out the problem. The US and Japanese Governments along with agency lenders JBIC, NEXI, US Ex-Im and OPIC, in particular, devoted time and energy to encourage PLN and the Government of Indonesia, as well as to the commercial banks, that it was in their best long-term interests to reach a mutually acceptable solution as to how Paiton would proceed.
As the end of 1999 neared, Paiton's lenders and sponsors were faced with two immediate problems: 1) given PLN's non-payment, Paiton was unable to make its first debt service payment; and 2) the ?date certain? for US Ex-Im to take out the commercial banks' construction loans was rapidly approaching. Of these two items, the most universal problem was to maintain US Ex-Im's involvement in the deal as US Ex-Im was a linchpin to the original financing.
In an agreement that preserved the Project's lifeblood, all parties to the financing agreed to a constructive interim arrangement. Among these were:
? Paiton's lenders agreed to a standstill agreement wherein lenders agreed to forbearance of principal payments;
? Paiton's sponsors agreed to allow their contingency equity commitments, which had been made for purposes of funding construction cost overruns only, to additionally cover lenders' interest payments; and
? US Ex-Im agreed to extend its term loan commitment.
Shortly thereafter, the EPC Contractor agreed to release its lien on the plant even though it had not been fully paid.
The restructuring period begins
During the period following the onset of the macroeconomic crisis, Paiton and its sponsors had already been busy in strategizing how to work its way out of this difficulty. Paiton had brought Ron Landry on board as President Director as he already had extensive experience in working out difficult situations in Indonesia and elsewhere and had the appropriate firm, yet genial and constructive, personality to handle the tough negotiations that were to ensue with PLN and the Government.
Although demand on the Java-Bali grid was recovering quickly in the aftermath of Indonesia's severe recession, evacuation of power from the Paiton complex was constrained by lack of transmission infrastructure on the grid. Ron's leadership, bolstered by the lenders' continuing forbearance, the sponsors' on-going support and help from the Government of Indonesia, led to a series of interim arrangements with PLN that allowed for fixed capacity payments that increased monthly. Over time, these payments became enough to service Paiton's interest obligations without further direct contingent equity support from Paiton's sponsors.
After two years' worth of intense discussions, Paiton and PLN agreed to a new long-term arrangement on 14 December 2001. The new deal eliminated the step-down capital cost recovery tariff arrangement and replaced it with a flat tariff that was both affordable to PLN in its continuing financial difficulties and politically defensible in terms of comparable tariffs in the region. In addition, PLN and Paiton agreed to a new arrangement to bring the pass-through of coal costs to a basis that better mirrored more developed market rates. PLN extended the PPA from 30 to 40 years and agreed to pay back a portion of arrearages on unpaid capacity payments over a 30-year period.
The debt restructuring
As the terms of the new PPA arrangements firmed up, the sponsors and lenders were motivated to restructure the project's debt so that principal payments could commence. Towards the end of 2001, Paiton hired ABN Amro as debt restructuring financial advisor to assist in the debt restructuring exercise. In addition to the practical experience of having significant experience in advising on and arranging Asian IPP financings, ABN Amro also had extensive experience and contacts with the governmental agency and commercial bank lenders.
Together, Paiton, its sponsors and ABN Amro were determined to continue the consensus-building relationship with Paiton's lenders that had worked well in the past. In other words, there would be no irrational brinkmanship that often characterizes debt-restructuring negotiations. Rather, the goal was for all parties to work together on a mutually-agreeable deal. Further, unlike many corporate debt restructurings in the region, Paiton had continued to work with its lenders on a fully transparent basis. Project contracts, operating results, technical items, financial models, etc. were shared and discussed regularly with the lenders and their counsel. ABN Amro also set up a debt restructuring website to ensure quick and easy access to information.
To frame the debt restructuring negotiations, Paiton and its sponsors set forth certain cardinal principles:
? There would be no ?haircuts? on lenders' principal;
? The sponsors would receive a reasonable return on their investment;
? Neither lenders nor sponsors would increase their respective exposures;
? Third-party claims would be settled amicably and funds would be allocated to payment of these settlements;
? Each of Paiton's counterparties would accept their appropriate level of burden-sharing; and
? All parties would work to ensure that US Ex-Im's take-out would be realized, albeit on US Ex-Im's agreement with commercial bank construction lenders on ?risk sharing? (i.e., US Ex-Im would provide something less than a complete funding of its take out for the commercial banks' construction loans).
Of course, the debt restructuring also had to match the restructured project cash flows resulting from the revised deal with PLN. To achieve this, Paiton engineered the development of a debt restructuring plan with the US and Japanese governmental agencies given that JBIC, NEXI, US Ex-Im and OPIC had persevered with their on-going support and commitment to Paiton. JBIC, US Ex-Im and OPIC agreed to stretch their loan maturities and re-price their interest rates, some of which had been fixed in 1995. NEXI agreed to revise the structure of their political-risk insurance package to be consistent with the terms of the JBIC co-financing facility. On September 24, 2002, the four agencies signed a term sheet with Paiton and its sponsors setting forth the commercial terms of the new agreement.
Given the strong support shown by the agency lenders and a fair and equitable debt restructuring plan, the commercial banks ratified the term sheet in early November 2002, with bondholders following shortly thereafter. Although a full closing by New Years Day, 2003 had been planned, the complexity of the documentation required more time. Latham & Watkins, lenders' counsel and Skadden, Arps, Slate, Meagher & Flom, Paiton's counsel, did an around the clock effort in meeting the 14 February 2003 deadline which was the expiry date of the interim arrangements with the project's lenders and one day prior to the initial repayment date agreed to in the debt restructuring plan. US Ex-Im and their counsel, Mayer, Brown, Rowe & Maw should also be commended for their diligent approach to managing the conditions precedent to the US Ex-Im term loan. Due to space constraints, it is impossible to mention everyone involved in the closing, but special mention must also be given to the commercial bank lead lenders, JP Morgan Chase, Mizuho Corporate Bank and Credit Lyonnais.
Conclusion
Throughout the restructuring process, Paiton consistently followed the principles of consensus-building through engagement, communication and transparency, culminating in a comprehensive restructuring package that addresses the interests of all stakeholders. The process toward closing was highly complex and time consuming and required approvals from literally dozens of parties, however, in the end, all believe that the final package will be sustainable in the long term.
While Paiton may not be a prototype for all debt restructurings, it is nevertheless a useful example of survival and reconciliation for a project that faces a short-term market disruption yet demonstrates a clear, economic value in the long term.
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The restructuring of Paiton is a case study in patience and consensus-building among a large and diverse group of stakeholders that includes three foreign equity sponsors, four Japanese and US governmental agencies, a syndicate of commercial banks, bondholders, third-party fuel chain counterparties, an EPC contractor consortium and, of course, P.T. PLN, the offtaker and wholly owned vehicle of the Government of Indonesia. The success of the restructuring hinged on each of these stakeholders agreeing to accept its equitable amount of burden to ensure the on-going viability of Paiton and thereby ensure adequate supplies of electricity to the Java-Bali grid. As a result of this burden sharing, the restructured deal should demonstrate enhanced resilience of the project in the face of any future external shocks.
The closing of Paiton's debt restructuring marks the end of a tortuous five-year saga that began with the onset of the macroeconomic crisis in Indonesia. This article will briefly describe the history of Paiton and touch upon the pragmatic and coordinated process that has led to this groundbreaking accomplishment.
From closing to crisis
Back in the mid-1990s, Indonesia was a darling of the IMF and the community of debt and equity investors. GDP growth was high and electricity demand was expected to grow at greater than 10% per annum on the Java-Bali grid. PLN needed power generation...and fast! The Government also determined that it did not want to pay for all of that generation with its sovereign credit.
Paiton, a 1,230MW coal-fired independent power project (IPP) in East Java, was first off the blocks. The Project was tendered in 1991, reached agreement with PLN and the Government on a Power Purchase Agreement (PPA) in 1994 and achieved financial closing in April, 1995. At the time, Paiton was the largest IPP to be financed on a project-financing basis in a developing country and a model for other IPPs in Indonesia. Paiton's financing relied heavily on direct loans and political and commercial risk insurance and guarantees from governmental agencies including The Export-Import Bank of Japan (now Japan Bank for International Cooperation, JBIC), the Overseas Private Investment Corporation (OPIC), the Ministry of Trade and Industry of Japan (now Nippon Export and Investment Insurance, NEXI) and US Ex-Im. Under coverage from these agencies, directly and indirectly, a large syndicate of commercial banks provided construction and term loans. Three of the Project's sponsors, affiliates of Edison Mission Energy, Mitsui & Co., Ltd. and General Electric Capital Corporation, committed a finite amount of contingent equity to support completion of the project. The financing structure was augmented in 1996 when a syndicate of US bondholders provided funds on the basis of investment grade ratings from two major US rating agencies.
The financing closed with certain risks not unusual to mid-1990s IPP project financings in Asia, among them:
? A Step-Down Capital Cost Recovery Tariff: Since export credit agencies must follow the ?OECD Consensus? regarding tenors and interest rates, the loans were scheduled to amortize over twelve years from the start of commercial operations. To ensure adequate debt service coverage ratios, as well as an equity return that took Indonesian country risk into account, the capital cost recovery portion of the tariff had a step-down feature. PLN had agreed to a high capital cost recovery tariff over the first twelve years of the PPA that reduced by about half during the remainder of the thirty-year PPA term.
? Foreign-Exchange Indexing: Owing to the US dollar loans and equity costs, as well as construction costs and certain offshore operations and maintenance expenses, Paiton's tariff (as well as that for most Indonesian IPPs), while denominated in Indonesian Rupiah, was largely indexed to address fluctuations in the value of rupiah vis-a-vis the dollar.
? Long-Term Coal Supply with Dedicated Reserves: The Government had required Paiton to utilize Indonesian coal for the Project. The Government also required that Paiton's plant perform to environmental requirements far more stringent than applicable to PLN's plants. This required Paiton to find and use low sulphur, low ash, sub-bituminous coal from Kalimantan.
At the time of closing, however, the Indonesian coal industry was in the early stages of development. Pursuant to the PPA, Paiton was responsible for the ?safe, adequate and reliable? supply of coal. Quite logically and consistent with standard project financing practice, Paiton's lenders insisted on a secure ?fuel chain? including dedicated reserves, stockpiles at various points on the chain and a transportation strategy involving long-term contracts with third parties. As a result of this coal chain, the price of coal that Paiton was paying was substantially higher than what PLN was paying to fuel its own plants, which were not required to maintain such stringent requirements. Nevertheless, under the PPA, PLN was obligated to reimburse Paiton for the entire fuel bill.
These components drove the tariff to a level higher than PLN was receiving from its customers. As in the Philippines, where a crash power generation program had alleviated 12-hour brownouts, many argued at the time that it was worth paying a high price for power to avoid the political and economic consequences of having industry shut down and the lights go out.
The Rupiah crashes
Although perhaps not as dramatic as the assassination of John F. Kennedy or the first steps on the moon by Neil Armstrong, many in Asia will remember what they were doing when word first came that Thailand had abandoned its peg of the Thai Baht to the dollar. In the ensuing months, watching Bloomberg as the currencies and stock and bond markets of many of the heretofore economic dynamos in Asia fell, was a common pastime. The Rupiah during that period fell from approximately 2,450 to the dollar to, at worst, 17,000, before recovering to levels in the 8,000 to 10,000 range. (The current rate is around 9,000.)
Naturally, this 70+% drop in the value of the Rupiah resulted in a sharp recession in the Indonesian economy. The value (in dollar terms) of PLN's invoices to its customers dropped to about 1.7 cents/kWh. It was very clear to all of the Indonesian IPPs that PLN would have trouble paying their dollar-indexed tariffs. The Government of Indonesia quickly announced the postponement or cancellation of many IPPs. It and PLN further determined that they would pay for IPP power only at a rate equivalent to 2,450 Rupiah/dollar, the rate the Government had used for its 1997/1998 budget.
At this time of macroeconomic crisis, Paiton's lenders and sponsors made their first critical decision ? to complete construction of the plant. All of these investors correctly (as it appears now) determined that a completed plant had much more value than a rusting hulk. This patience and foresight in the midst of extreme uncertainty set a strong benchmark for future decision-making by the group.
Commercial operations occurs ? no dispatch
When commercial operations occurred in mid-1999, the worst fears of sponsors and lenders were realized when PLN refused to take the power from Paiton's plant or to pay for it, despite Paiton's making such power available as provided in the PPA.
While Paiton and its Sponsors could have taken the route of immediately challenging PLN's action through international arbitration, as some IPPs did, Paiton's sponsors and lenders, most of whom have other business interests and a longer-term view of Indonesia, again patiently agreed to work out the problem. The US and Japanese Governments along with agency lenders JBIC, NEXI, US Ex-Im and OPIC, in particular, devoted time and energy to encourage PLN and the Government of Indonesia, as well as to the commercial banks, that it was in their best long-term interests to reach a mutually acceptable solution as to how Paiton would proceed.
As the end of 1999 neared, Paiton's lenders and sponsors were faced with two immediate problems: 1) given PLN's non-payment, Paiton was unable to make its first debt service payment; and 2) the ?date certain? for US Ex-Im to take out the commercial banks' construction loans was rapidly approaching. Of these two items, the most universal problem was to maintain US Ex-Im's involvement in the deal as US Ex-Im was a linchpin to the original financing.
In an agreement that preserved the Project's lifeblood, all parties to the financing agreed to a constructive interim arrangement. Among these were:
? Paiton's lenders agreed to a standstill agreement wherein lenders agreed to forbearance of principal payments;
? Paiton's sponsors agreed to allow their contingency equity commitments, which had been made for purposes of funding construction cost overruns only, to additionally cover lenders' interest payments; and
? US Ex-Im agreed to extend its term loan commitment.
Shortly thereafter, the EPC Contractor agreed to release its lien on the plant even though it had not been fully paid.
The restructuring period begins
During the period following the onset of the macroeconomic crisis, Paiton and its sponsors had already been busy in strategizing how to work its way out of this difficulty. Paiton had brought Ron Landry on board as President Director as he already had extensive experience in working out difficult situations in Indonesia and elsewhere and had the appropriate firm, yet genial and constructive, personality to handle the tough negotiations that were to ensue with PLN and the Government.
Although demand on the Java-Bali grid was recovering quickly in the aftermath of Indonesia's severe recession, evacuation of power from the Paiton complex was constrained by lack of transmission infrastructure on the grid. Ron's leadership, bolstered by the lenders' continuing forbearance, the sponsors' on-going support and help from the Government of Indonesia, led to a series of interim arrangements with PLN that allowed for fixed capacity payments that increased monthly. Over time, these payments became enough to service Paiton's interest obligations without further direct contingent equity support from Paiton's sponsors.
After two years' worth of intense discussions, Paiton and PLN agreed to a new long-term arrangement on 14 December 2001. The new deal eliminated the step-down capital cost recovery tariff arrangement and replaced it with a flat tariff that was both affordable to PLN in its continuing financial difficulties and politically defensible in terms of comparable tariffs in the region. In addition, PLN and Paiton agreed to a new arrangement to bring the pass-through of coal costs to a basis that better mirrored more developed market rates. PLN extended the PPA from 30 to 40 years and agreed to pay back a portion of arrearages on unpaid capacity payments over a 30-year period.
The debt restructuring
As the terms of the new PPA arrangements firmed up, the sponsors and lenders were motivated to restructure the project's debt so that principal payments could commence. Towards the end of 2001, Paiton hired ABN Amro as debt restructuring financial advisor to assist in the debt restructuring exercise. In addition to the practical experience of having significant experience in advising on and arranging Asian IPP financings, ABN Amro also had extensive experience and contacts with the governmental agency and commercial bank lenders.
Together, Paiton, its sponsors and ABN Amro were determined to continue the consensus-building relationship with Paiton's lenders that had worked well in the past. In other words, there would be no irrational brinkmanship that often characterizes debt-restructuring negotiations. Rather, the goal was for all parties to work together on a mutually-agreeable deal. Further, unlike many corporate debt restructurings in the region, Paiton had continued to work with its lenders on a fully transparent basis. Project contracts, operating results, technical items, financial models, etc. were shared and discussed regularly with the lenders and their counsel. ABN Amro also set up a debt restructuring website to ensure quick and easy access to information.
To frame the debt restructuring negotiations, Paiton and its sponsors set forth certain cardinal principles:
? There would be no ?haircuts? on lenders' principal;
? The sponsors would receive a reasonable return on their investment;
? Neither lenders nor sponsors would increase their respective exposures;
? Third-party claims would be settled amicably and funds would be allocated to payment of these settlements;
? Each of Paiton's counterparties would accept their appropriate level of burden-sharing; and
? All parties would work to ensure that US Ex-Im's take-out would be realized, albeit on US Ex-Im's agreement with commercial bank construction lenders on ?risk sharing? (i.e., US Ex-Im would provide something less than a complete funding of its take out for the commercial banks' construction loans).
Of course, the debt restructuring also had to match the restructured project cash flows resulting from the revised deal with PLN. To achieve this, Paiton engineered the development of a debt restructuring plan with the US and Japanese governmental agencies given that JBIC, NEXI, US Ex-Im and OPIC had persevered with their on-going support and commitment to Paiton. JBIC, US Ex-Im and OPIC agreed to stretch their loan maturities and re-price their interest rates, some of which had been fixed in 1995. NEXI agreed to revise the structure of their political-risk insurance package to be consistent with the terms of the JBIC co-financing facility. On September 24, 2002, the four agencies signed a term sheet with Paiton and its sponsors setting forth the commercial terms of the new agreement.
Given the strong support shown by the agency lenders and a fair and equitable debt restructuring plan, the commercial banks ratified the term sheet in early November 2002, with bondholders following shortly thereafter. Although a full closing by New Years Day, 2003 had been planned, the complexity of the documentation required more time. Latham & Watkins, lenders' counsel and Skadden, Arps, Slate, Meagher & Flom, Paiton's counsel, did an around the clock effort in meeting the 14 February 2003 deadline which was the expiry date of the interim arrangements with the project's lenders and one day prior to the initial repayment date agreed to in the debt restructuring plan. US Ex-Im and their counsel, Mayer, Brown, Rowe & Maw should also be commended for their diligent approach to managing the conditions precedent to the US Ex-Im term loan. Due to space constraints, it is impossible to mention everyone involved in the closing, but special mention must also be given to the commercial bank lead lenders, JP Morgan Chase, Mizuho Corporate Bank and Credit Lyonnais.
Conclusion
Throughout the restructuring process, Paiton consistently followed the principles of consensus-building through engagement, communication and transparency, culminating in a comprehensive restructuring package that addresses the interests of all stakeholders. The process toward closing was highly complex and time consuming and required approvals from literally dozens of parties, however, in the end, all believe that the final package will be sustainable in the long term.
While Paiton may not be a prototype for all debt restructurings, it is nevertheless a useful example of survival and reconciliation for a project that faces a short-term market disruption yet demonstrates a clear, economic value in the long term.
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