Uncertainty haunts BLT

Some of Berlian Laju Tanker’s foreign creditors are questioning the motives of those that provided overwhelming support of an extension that saw a vote on its Indonesian overhaul postponed till 2013.

Jack Noonan, the chief executive of US affiliate Chembulk Tankers, says the latest in a series of extensions proves that the vast majority of counterparties involved in the so-called PKPU proceedings in Jakarta believe BLT is “heading in the right direction”.

He told TradeWinds that creditors had two chances to vote against a tentative restructuring plan filed with an Indonesian court but in both cases opted to delay the deadline in an effort to “finalise and fully understand” a proposal that will be put to the test on 2 January 2013.

“They could have voted the plan down but instead they voted to extend because they have confidence in the plan and are willing to hang in there,” he said Tuesday. “Obviously there will be some more back and forth and negotiations but things are looking positive.”

While nearly 100% of the claimants representing 95% of the collective value of the claims before a Jakarta court supported the delay of the November deadline a creditor from outside of Indonesia doesn’t agree with Noonan’s assessment of the situation.

“The extension doesn’t represent a vote of confidence in BLT’s proposal but instead what it does seem to show is that the creditors are buying time for themselves so they can come back with their own plan,” they said. “I am confident BLT’s plan will ultimately be rejected.”

If the proposal were turned down the source says BLT’s attorneys and advisors would likely file an appeal with Indonesian legal authorities in a move that would have the potential to add what they described as “years” to the PKPU timeline given the system’s inefficiencies.

“The plan BLT is pushing tries to make bondholders whole in order to avoid fraud investigations that would be triggered if the bondholders incurred heavy losses,” they added. “Also, you have to remember that most senior creditors aren’t participating [in the PKPU proceedings].

“What I see as a likely scenario is BLT’s plan will be rejected and an appeal filed and in the meantime senior lenders will do what they can to repossess BLT’s assets and this would amount to a de facto liquidation. If that were to happen, I wouldn’t be surprised to see Chembulk sold.”

At the moment BLT and many of its subsidiaries are operating under the protection of Section 210 in Singapore and Chapter 15 in the US. If the restructuring proposal passed in Jakarta and the other two jurisdictions, Noonan hopes this would set the stage for international enforcement.

The Connecticut-based executive declined to shed light on the specifics of the restructuring proposal when pressed but said it “outlines a new business model that includes a streamlined fleet and operations” and includes provisions that will help “recompense BLT’s creditors” without elaborating further.