Indonesia’s apparel maker PT Pan Brothers avoided bankruptcy after it secured creditors’ approval to restructure 8.6 trillion rupiah (US$537 million) of debt.

More than 90% of the creditors gave their nod on the company’s latest debt proposal, according to Khusaini, a judge at Indonesia’s Jakarta court, after a voting on Wednesday. “The result will be formalised in a consultative meeting on December 23,” Khusaini, who goes by one name, said.

The decision is a lifeline for Pan Brothers that employs around 27,000 workers in one of Indonesia’s biggest manufacturing segments and as the government has vowed to save jobs in the struggling sector.

Representative for Pan Brothers declined to comment on the votes as the company would wait for the court to sanction the outcome.

Among the key debt that it was looking to settle were US$171.1 million in outstanding principal on a dollar-denominated bond due in December next year and US$138.4 million syndicated facilities, Bloomberg reported on Tuesday.

Under the revised proposal, bondholders are presented with an additional settlement option, which is to convert the existing notes with 7.625% coupon into entirely new ones with 15-year maturity at 1% annual interest.

“The restructuring will give the company breathing space, but they still need to face the challenging business environment,” said Teddy Hariyanto, senior credit analyst at PT Mandiri Sekuritas.

This is the second debt restructuring process that Pan Brothers, one of the largest clothes producers in Indonesia, is going through in three years. The company won creditors’ approval to restructure about US$310 million of debt at the end of 2021 after the pandemic shuttered global trade and weakened the outlook of Indonesia’s textile-related industry.

But the industry’s slower-than-expected recovery brought Pan Brothers back to the negotiating table with creditors this year. The lingering woes also resulted in rival PT Sri Rejeki Isman being declared bankrupt by an Indonesian court in October.

  - Bloomberg