IBRA reaches deal on APP debt restructuring plan<\/p>\n
M. Taufiqurrahman, The Jakarta Post, Jakarta<\/p>\n
After protracted negotiations, the Indonesian Bank
\nRestructuring Agency (IBRA) and foreign creditors grouped under
\nthe Export Credit Agency (ECA) agreed on Friday on a debt
\nrestructuring deal for Asia Pulp & Paper (APP).<\/p>\n
IBRA deputy chairman for credit and asset management, Mohammad
\nSyahrial, said all parties had agreed upon a default mechanism
\nthat would protect creditors if the Singapore-based APP went into
\na second default.<\/p>\n
\"The definitive restructuring agreement was signed early this
\nmorning,\" he said.<\/p>\n
Under the agreement, APP can be declared in default if 75
\npercent of creditors agree to the move. If the creditors fail to
\nobtain 75 percent support for default, they can take a second
\nvote with a 67 percent requirement, a third vote with a 51
\npercent requirement and a fourth vote with a threshold of only 25
\npercent. All of the stages must be completed within 180 days.<\/p>\n
The agreement also enables creditors to convert their debt to
\nequity and to take over APP's Indonesian companies.<\/p>\n
Syahrial said the agreement still had to be presented to the
\nFinancial Sector Policy Committee (FSPC) for approval. The
\ncommittee, a group of senior economic ministers, has the final
\nsay on major deals undertaken by IBRA.<\/p>\n
\"We plan to hold a meeting with the FSPC late in the afternoon
\n(on Friday),\" he said.<\/p>\n
FSPC, which groups senior economic ministers and holds the
\nfinal say on any major transaction made by IBRA, approved the
\ndeal, a source said.<\/p>\n
IBRA is APP's single largest creditor with total debts of $1
\nbillion. The agency took over the debts from troubled local banks
\nin the aftermath of the late 1990s financial crisis.<\/p>\n
The deputy chairman of IBRA added that the agreement would be
\nsigned by all parties involved by the first week of July at the
\nlatest.<\/p>\n
\"We need to complete the administrative work and the
\narrangements for the collateral,\" he said when asked why the
\ndeal could not be signed immediately.<\/p>\n
In March 2001, APP defaulted on $13.9 billion in debt, one of
\nthe largest defaults in the history of emerging markets.<\/p>\n
The debt includes $6.7 billion owed by APP's four Indonesian
\npaper companies -- PT Indah Kiat Pulp & Paper, PT Tjiwi Kimia, PT
\nPindodeli Pulp & Paper and PT Lontar Papirus Pulp & Paper
\nIndustries.<\/p>\n
Earlier this year, 11 governments of foreign creditors sent a
\nletter to President Megawati Soekarnoputri asking her to
\nintervene in the restructuring of the APP debt.<\/p>\n
The letter, cosigned by the ambassadors of Canada, nine
\nEuropean countries and Japan, urged the President to order her
\nministers to supervise IBRA to ensure a fair, commercially
\nreasonable and transparent restructuring of Asia's largest paper
\nproducer.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ibra-reaches-deal-on-app-debt-restructuring-plan-1447893297",
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"sponsor": "Okusi Associates",
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