IBRA hopes to reach APP debt agreement next week
\nLinda Silaen
\nDow Jones
\nJakarta<\/p>\n
The Indonesian Bank Restructuring Agency (IBRA), said on
\nFriday that it hopes to reach a compromise agreement with foreign
\ncreditors next week to restructure US$6.7 billion debt held by
\nAsia Pulp & Paper Co.'s (PAP) four Indonesian companies.<\/p>\n
"I'm sure we can sign an agreement on Monday," IBRA Chairman
\nSyafruddin Temenggung told reporters.<\/p>\n
Foreign export credit agencies and IBRA have been deeply
\ndivided over how to restructure APP's Indonesian debt. Singapore-
\nbased APP, which has operations in Indonesia and China, two years
\nago stopped repaying its $13.9 billion debt owed to hundreds of
\nbanks, bondholders, pension funds and other creditors around the
\nworld. That has made it one of the largest emerging market
\ndebtors.<\/p>\n
IBRA - a government agency and APP's largest single creditor
\nwith $1 billion held - signed a deal with the company in December
\nunder which the four Indonesian units would repay just $1.2
\nbillion of $6.7 billion they owe over a 10-year period.<\/p>\n
Almost all foreign creditors rejected the deal, which they
\nsaid failed to include provisions to ensure APP used all
\navailable cash-flow from business operations to repay debt. The
\nproposals also didn't include a mechanism to stop APP defaulting
\nagain, foreign creditors said.<\/p>\n
Foreign governments whose export credit agencies are owed a
\ncombined $960 million - including the U.S., Japan, and a number
\nof European nations - warned that the agreement would force
\nforeign creditors to take millions of dollars in write-offs, and
\nmake it difficult for Indonesia to secure financing for future
\nprojects.<\/p>\n
IBRA handed a compromise deal to creditors this week, which
\nproposes setting up a management team to control APP's Indonesian
\noperations during restructuring, an IBRA source told Dow Jones
\nNewswires Friday. The team will include representatives of IBRA,
\nforeign export credit agencies, and APP, the source added.<\/p>\n
The new plan also includes "punishments" for APP if they fail
\nto keep to the terms of the restructuring, the source also said.
\nNo other details were available.<\/p>\n
The foreign export credit agencies have asked to study the
\nproposal with their lawyers, before meeting with IBRA again
\nMonday, the source said. Foreign export credit agencies were
\nunavailable for comment on Friday.<\/p>\n
The export credit agencies had proposed in February that IBRA
\nagree to set up an independent holding company to monitor cash-
\nflow during restructuring, and include a mechanism which would
\nallow creditors to take control of APP's four Indonesian units in
\nthe event of a second default. It remains unclear how far IBRA's
\nnew plan goes toward satisfying the export credit agencies'
\nproposals.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ibra-hopes-to-reach-app-debt-agreement-next-week-1447899208",
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