Mobile-8, road to default ???

PEFINDO downgraded the rating of PT Mobile 8 Telecom Tbk. (FREN or the Company) to idSD (Selective Default) from idCCC while the rating of the Company’s Bond I/2007 of IDR675 billion is still maintained at idCCC under Creditwatch with Negative Implication.
The downgrade is triggered by the Company’s failure to fulfill the accelerated payment of its US$100 million guaranteed senior notes on December 16, 2008.
For the IDR bonds, the Company paid the coupon due on December 15, 2008. However, the Company is under obligations to accelerate payment on the principal amount of the IDR bonds as there is a cross default clause in the IDR bonds indenture. The ratings will be reduced to Default should the Company fail to do so.
Mobile-8 Telecom and the bonds holders failed make deal on the meeting held in Singapore to discuss on the bonds restructuring. The bonds holders refuted the Mobile-8 proposal to convert the US$100 million corporate debt.
The meeting discussed about the debt restructuring namely to extend the payment period, debt payment value cut down, coupon payment suspension, and partly bonds conversion to shares. In case there is no deal, Mobile-8 could face default.