APP hopes to reach full debt restructuring agreement soon<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Asia Pulp & Paper Co. (APP) hopes that its recent proposal to
\nthe U.S. market authority will help settle differences with
\nforeign creditors, a condition that should help reach a full debt
\nrestructuring agreement for the US$6.7 billion debt owed by its
\nIndonesian units in August.<\/p>\n
APP spokesman Yan Partawijaya said that a restructuring
\nproposal filed with the U.S. Securities and Exchange Commission
\n(SEC) last week was expected to help creditors fully agree to key
\npoints in the company's master restructuring agreement (MRA).<\/p>\n
\"The filing with the SEC is aimed at bridging differences with
\nour dollar-denominated bondholders, which accounts for around 50
\npercent of the company's debt owed by the Indonesian units,\" said
\nYan after attending a seminar late last week.<\/p>\n
Yan said that thus far 44 percent of the company's creditors
\nhad agreed with the MRA.<\/p>\n
In order for the MRA to be effective, the company needs to
\nsecure the support of 90 percent of its creditors.<\/p>\n
Singapore-based APP, which was founded by tycoon Eka Tjipta
\nWidjaja, stopped repaying its total US$13.9 billion debt
\n(considered to be one of the largest emerging market debts) in
\nMarch 2001, nearly half of which is owed by its Indonesian units.
\nTalks with creditors dragged on, with little progress for more
\nthan three years.<\/p>\n
The company, which also has an operation in China, is indebted
\nto hundreds of foreign creditors, ranging from export credit
\nagencies, to pension funds and individual bondholders.<\/p>\n
In its filing with the SEC, APP proposes to issue new bonds to
\nthe bondholders to replace the defaulted bonds. The new bonds are
\nexpected to carry yields of around 3 percent, lower than the
\nolder bonds of around 10 percent.<\/p>\n
However, the replacement bonds will have a longer maturity
\nperiod of up to 10 years, from the previous bonds, which carry a
\nperiod of five years.<\/p>\n
The SEC is expected to come up with the bondholders' opinion
\non Aug. 15.<\/p>\n
Yan explained that APP had to go through the SEC because its
\ndollar-denominated bonds owned by the creditors were listed in
\nthe United States.<\/p>\n
\"This is also part of U.S. regulations that we have to undergo
\nin order to settle the problems,\" said Yan, who is a former
\nsenior anchor for state television station TVRI.<\/p>\n
Yan said that APP would try to extend its offering to the
\nbondholders via the SEC if its attempt to replace the bonds
\nreceived a thumbs-down from the bondholders.<\/p>\n
\"I hope the bondholders can agree with the filing. This is the
\nbest solution that we have come up with. It is better for them to
\nagree with it, rather than fail to receive any payment,\" he said.<\/p>\n
APP Indonesian units comprise of PT Indah Kiat Pulp & Paper
\nMills, PT Pabrik Kertas Tjiwi Kimia, PT Pindo Deli Pulp & Paper
\nMills, PT Lontar Papyrus Pulp & Paper Industry, and PT Eka Mas
\nFortuna.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/app-hopes-to-reach-full-debt-restructuring-agreement-soon-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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