APP raises $401m through placement<\/p>\n
HONG KONG (Dow Jones): In the latest effort by an Asian
\ncompany to tap global financial markets, Asia Pulp & Paper Co.
\n(APP) completed the placement late Thursday of 48.1 million
\nAmerican Depositary Receipts, raising US$404 million to help
\nfinance its operations in China.<\/p>\n
APP is a Singapore-based paper company whose primary
\noperations -- and controlling Widjaja family -- are Indonesian.<\/p>\n
Unlike many other Asian companies, it expanded aggressively
\nduring the Asian crisis. The paper company, which is widely
\nregarded as the lowest-cost paper producer in the world - plans
\nto ramp up operations in China later this year, according to a
\ncompany spokesman.<\/p>\n
The share placement was priced at $8.40 per share, and closed
\nin New York at $9.81 per share. Ajmal Rahman, managing director
\nof equity capital markets at Merrill Lynch, which placed the
\nshares, said 50% of the shares were taken up by U.S. investors,
\nwhile 30 percent were Asian-based investors and 20 percent were
\nbased in Europe.<\/p>\n
APP is not alone in turning to the markets for capital while
\nthey're receptive to Asian issuers. Earlier this week, several
\nHong Kong companies, including Sino Land Co., COSCO Pacific Ltd.,
\nand New World Infrastructure Ltd. issued equity or convertible
\nbonds.<\/p>\n
The share placement is part of a more complicated
\nrestructuring program being undertaken by APP, which is among
\nAsia's most indebted companies. Earlier this month, APP announced
\nplans to pay down $1.5 billion to $2 billion in debt by the end
\nof 2001.<\/p>\n
At the end of 1998, the company had debt obligations of
\nmore than $9 billion, in addition to hefty obligations through
\n$1.2 billion in preferred shares.<\/p>\n
As part of its efforts to restructure debt, APP is currently
\ntrying to swap nearly $2 billion of outstanding debt into new
\nunsecured guaranteed mandatory convertible notes due 2002. It has
\nalso issued bonus warrants to existing shareholders as of April
\n19, according to Rahman. And it has announced plans to sell off
\nnon-core assets.<\/p>\n
"They still have considerable debt to support, however the
\nfact of the matter is they are beginning the process of
\ndeleveraging," said Rahman. He said the market responded
\npositively to the share placement in part because of APP's plans
\nto reduce debt.<\/p>",
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