PT Perusahaan Gas Negara,Indonesia's biggest gas distributor, will redeem US$150 million of 7.5% bonds due 2013 and US$125 million of 7.5% maturing 2014 using tax clauses in the securities term that were trigered ini 2006.
PGN hired Standard Chartered Plc to help it get loans that will be used to buy back bonds as
it seeks to reduce its cost of funding.
In the notes there is a provision allowing the issuer to exercise early redemption based on tax reasons. Indonesia terminated a tax treaty with Mauritius in 2006 that had enabled Jakarta-based Gas Negara, which sold the bonds through its Mauritius unit, to pay lower withholding tax.
it seeks to reduce its cost of funding.
In the notes there is a provision allowing the issuer to exercise early redemption based on tax reasons. Indonesia terminated a tax treaty with Mauritius in 2006 that had enabled Jakarta-based Gas Negara, which sold the bonds through its Mauritius unit, to pay lower withholding tax.
The tax rate rose to 20 percent after the treaty was annulled. The company will save money by using bank debt to redeem the bonds.
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