PT Pan Brothers Tbk

Project Overview

Our Client is one of Indonesia’s largest garment manufacturing groups, specializing in the manufacture of outdoor functional and performance apparel as well as sport-inspired and premium lifestyle apparel for leading global brands.

Challenges

• The Client faced severe working capital constraints due to a sharp reduction in bank trade lines during COVID-19, leading to supplier disruptions, declining orders, and the need for significant deleveraging. The capital structure comprised syndicated facilities (including banks and special situations funds) and offshore notes, creating multi-class creditor dynamics.
• The Client first entered into a restructuring through a Singapore Scheme of Arrangement in 2021, based on assumptions of a market recovery to pre-COVID-19 levels, additional working capital lines, and refinancing of the syndicated loan. However, following the 2021 restructuring, demand recovery proved slower than anticipated, LC facilities remained constrained, and the syndicated loan refinancing was not obtained.

Our Approach

• AJCapital acted as the financial advisor representing the Client.
• Reassessed the 2021 restructuring assumptions against actual performance, identifying structural gaps between projected recovery and realized demand;
• Developed a forward-looking business plan and financial model to determine sustainable debt capacity amid constrained working capital;
• Designed a restructuring framework balancing deleveraging and liquidity preservation, including: conversion of certain exposures into MCBs, extended maturities with minimal near-term cash servicing for unsustainable debt portions, exchange of existing notes into three new instruments, offering optionality aligned with differing creditor limitations;
• Worked closely with the bondholders’ trustee and offshore legal counsel to develop the bondholder voting process and respond to any queries on process and terms;
• Led creditor negotiations and coordinated with management, legal counsel, administrators, and creditor groups; and
• Preserved the critical working capital lines throughout the PKPU process to maintain operational continuity.

Outcome