Indonesia’s major clothes maker PT Pan Brothers is circulating a restructuring plan to creditors for the first time since missing a debt payment earlier this year, according to a person familiar with the matter.

Pan Brothers and its restructuring adviser have been presenting its debt revamp plan to bank lenders this week and will bring the proposal to bondholders next week, said the person who declined to be identified as the discussions were private. It plans to slash its debt load from around $325 million to $140 million, a level that it considers sustainable based on a 15-year financial projection, the person added.

The company plans to convert its outstanding dollar notes and half of its bilateral loans into mandatory convertible bonds, which will carry no interest and will be converted into equities after 10 years. The holders will control 51% of stakes in the textile maker after the conversion, the person added.

Pan Brothers, once the second-biggest listed apparel maker in Indonesia, was hit by the pandemic as exports declined. It defaulted on some borrowings in 2021 and got approval to restructure debt later that year. But the industry has struggled with post-pandemic recovery, and the firm defaulted on an interest payment again this year. Its major rival, PT Sri Rejeki Isman, also fell into distress again just two years after reaching a restructuring pact with creditors, and was declared bankrupt this week.

The proposed plan this time differs from Pan Brothers’ last restructuring, where it mostly sought maturity extensions. The changes, such as cutting debt levels, suggest weakened confidence that the firm will be able to fully pay back creditors.

A company representative didn’t respond to calls, emails and messages from Bloomberg News seeking comments.

For the company’s $123 million of syndicated loans, it’s proposing to stretch them by at least 15 years with just 1% of interest for the first five to six years. It’s also requesting grace periods for or minimum amount of principal payments during that period so the company can use its operational cash flow as working capital.

The plan is subject to change after the firm’s negotiation with creditors. Under its court-supervised debt restructuring proceedings, Pan Brothers’ final debt proposal will need to be presented to the court and approved by the majority of verified creditors collectively representing two-thirds of its total liabilities.