Asia Pulp & Paper to meet with creditors for talks<\/p>\n
SINGAPORE (Reuters): Asia Pulp & Paper, which called for a
\nmoratorium on its US$12 billion in debt last month, is finally
\nmeeting its creditors face-to-face on Monday but bond holders
\ndoubt a concrete rescheduling plan will emerge.<\/p>\n
\"There will be some summary numbers and they will probably map
\nout a broad timetable,\" said a bond fund manager in Hong Kong who
\nholds APP debt at the holding and operating company level.<\/p>\n
\"There will be some financials discussed at that meeting but
\nit's not going to be all that detailed.\"<\/p>\n
The troubled Singapore-based and New York-listed group, run by
\nthe Widjaja family which owns Indonesia's Sinar Mas conglomerate,
\nhas frozen its interest and principal repayments to preserve its
\nprecious cash.<\/p>\n
\"I don't expect any proposal yet,\" said Handoko Kartawidjaja,
\nan analyst at SG Securities in Jakarta. \"Usually at this early
\nstage, they will first do the administration on who owns what.\"<\/p>\n
Kartawidjaja said he did see a solid proposal being presented
\nfor six to nine months.<\/p>\n
Sources close to APP's debt restructuring team confirmed the
\ngroup had no concrete plan ready for the meeting in Singapore but
\nwas following the advice of financial adviser Credit Suisse First
\nBoston to face its creditors and give them the latest update.<\/p>\n
CSFB, which is also the adviser to other Indonesian giants
\nlike PT Indocement Tunggal Prakarsa, PT Bimantara Citra and PT
\nGajah Tunggal, is represented by Eric Varvel and Raymond Davis in
\nthe APP restructuring.<\/p>\n
The sources said the Indonesian junk bond king -- much of
\nAPP's debt is rated D by various agencies -- may not seek a
\ndiscount or \"haircut\" from its creditors on Monday, setting it up
\nfor a long and painful rescheduling process.<\/p>\n
In other debt restructuring cases where the amounts were
\nsubstantially smaller, companies needed at least one year to come
\nto a final approval from creditors, analysts said.<\/p>\n
\"That's because those companies have gained credibility and
\nconfidence from creditors. APP still needs to establish that,\"
\none Jakarta-based analyst said.<\/p>\n
The $12 billion -- equal to about 40 percent of Indonesia's
\ngross foreign exchange reserves -- makes APP's corporate debt
\nrestructuring one of the largest in an emerging market.<\/p>\n
Assets of the holding company are centered on Indonesia's PT
\nIndah Kiat Pulp & Paper, PT Pabrik Kertas Tjiwi Kimia and
\nunlisted PT Pindo Deli Pulp & Paper.<\/p>\n
Despite the debt woes, the Jakarta analyst said the Widjaja
\nfamily still wanted to keep a firm hand on the 10th largest paper
\nconcern in the world by capacity of paper and board in tons.<\/p>\n
\"The Widjajas still want to retain control over the firm they
\nhave built up from scratch. Its creditors may have to negotiate
\nwhat is left for the family after restructuring,\" he said.<\/p>\n
But the analyst said APP debt was \"so mind-boggling\" that
\nnobody would understand it except for the family.<\/p>\n
\"After looking at the debt, it looks more like a finance
\ncompany than a paper maker,\" he added.<\/p>\n
Creditors likely can expect more crevasses in APP's debt
\nmountain after this week's disclosure it failed to factor a $220
\nmillion loss on two currency swap contracts into its financial
\nstatements.<\/p>\n
\"The $220 million is not surprising and you can expect to hear
\nabout more,\" the bond fund manager said, adding that the amount
\ncould blow out through derivatives or offshore guarantees.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/asia-pulp-paper-to-meet-with-creditors-for-talks-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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