APP reaches compromise with foreign creditors<\/p>\n
Dow Jones, Jakarta<\/p>\n
Asia Pulp & Paper Co. said on Friday it has managed to iron
\nout its differences with creditors, and hopes by the end of
\nOctober to reach a full debt restructuring agreement for US$6.7
\nbillion owed by its Indonesian units.<\/p>\n
The settlement of APP's Indonesian debt is a crucial first
\nstep to resolving one of the largest corporate restructurings in
\nemerging-market history.<\/p>\n
The Singapore-based APP, which has operations in Indonesia and
\nChina, stopped repaying its total US$13.9 billion debt in March
\n2001. Talks with creditors dragged on, with little progress for
\ntwo years, before APP agreed in June to an outline restructuring
\nplan for its Indonesian company debt.<\/p>\n
APP's owners, the Widjaja family, have since then been
\ndemanding changes to the June deal, threatening to sink chances
\nof reaching an out-of-court settlement, creditors said.<\/p>\n
Representatives of foreign export-credit agencies from Japan,
\nGermany, Austria and Sweden, which are among APP's leading
\nforeign creditors, flew to Jakarta this week to try and forge a
\ncompromise with the Widjajas.<\/p>\n
The agencies and the Indonesian Bank Restructuring Agency,
\nwhich is APP's largest single creditor, agreed to some of the
\nWidjaja's proposed changes after two days of talks that ended
\nlate Thursday, said Gandhi Sulistiyanto, a negotiator for the
\ncompany.<\/p>\n
These include a revision to the June agreement extending the
\ntime by which APP must repay $2 billion in unsustainable - or
\nTranche C - debt to a maximum 22 years from 15 years as
\noriginally agreed. The Widjajas had been asking to remove any
\ndeadline for repaying this tranche of debt, according to people
\nfamiliar with the talks.<\/p>\n
Creditors and APP agreed to sign a definitive debt agreement
\non Oct. 24, he added. After that APP's hundreds of other
\ncreditors, who range from individual bondholders to pension
\nfunds, will be asked to vote on the plan.<\/p>\n
Still, APP's failure to keep to agreements in the past means
\ncreditors aren't confident of quickly tying up the discussions,
\nsaid people close to the talks. Representatives for the export-
\ncredit agencies declined to comment.<\/p>\n
The export-credit agencies might also have trouble getting
\nother creditors to agree to the deal. Many creditors have already
\ncriticized the June deal for being too lenient on APP by forcing
\nit to repay only $1.2 billion of sustainable - or Tranche A -
\ndebt over 10 years, while allowing the rest to be refinanced or
\nexchanged for convertible bonds.<\/p>\n
Other creditors have been unwilling to negotiate with the
\nWidjajas and have tried to wrest control of the company from the
\nfamily.<\/p>\n
Deutsche Bank AG, owed $193 million by APP, and France's BNP
\nParibas SA last year petitioned a court in Singapore to strip the
\nfamily of control and appoint an administrator to manage the
\ncompany. The court rejected the banks' petition, but said if
\nconsensual debt restructuring remained stalled, the appointment
\nof judicial managers couldn't be ruled out in the future.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/app-reaches-compromise-with-foreign-creditors-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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