JP\/13SIGN<\/p>\n
Principal creditors sign APP debt restructuring scheme<\/p>\n
M. Taufiqurrahman
\nThe Jakarta Post
\nJakarta<\/p>\n
Principal creditors of Asia Pulp & Paper Co. Ltd. (APP) of
\nSingapore signed on Tuesday a nonbinding debt restructuring plan
\nas an initial step to reach a final settlement for the US$6.9
\nbillion debt owed by the company's Indonesian subsidiaries.<\/p>\n
Vice chairman of APP's restructuring team Gandi Sulistyanto
\nsaid that 40 percent of the principal creditors had agreed to
\nsign the agreement, referred to as a key terms restructuring
\nsummary.<\/p>\n
Under the agreement the Indonesian subsidiaries will be asked
\nto repay $1.2 billion of their $6.7 billion debt within 10 years.<\/p>\n
Also, APP, which is controlled by the Eka Cipta family, can be
\ndeclared in default if 75 percent of the creditors agree.<\/p>\n
If the creditors fail to obtain the 75 percent support for
\ndefault, they can take a second vote, with a 67 percent
\nrequirement, a third (51 percent) and fourth (25 percent). All
\nstages must be completed within 180 days.<\/p>\n
Tuesday's agreement also enables creditors to convert their
\nloans to equity and to take over APP's Indonesian companies.<\/p>\n
Among the principal creditors that signed the agreement were
\nthe Indonesian Bank Restructuring Agency (IBRA), nine countries
\nunder the umbrella of Export Credit Agencies (ECA), two Japanese
\ntrading companies and the rupiah bondholders.<\/p>\n
U.S. bondholders failed to sign the agreement as their
\ncountry's security law prohibited creditors from making a deal
\nbefore a confidentiality agreement was established.<\/p>\n
After the signing of the agreement, key terms will soon be
\ntranslated into a legally binding restructuring scheme that will
\nbe signed in early July 2003.<\/p>\n
Nicky Tjan, a legal advisor for APP, said that the key terms
\nwould soon be discussed with creditors that had not signed
\nTuesday's agreement.<\/p>\n
"I think, shortly after this signing, we shall speak to the
\nother creditors, especially bondholders, who have not been
\ninvolved in this negotiation, and try to explain this deal," Tjan
\nsaid.<\/p>\n
Despite the signing, hundreds of U.S. dollar bondholders were
\nleft in the cold as they were excluded from the negotiation on
\nthe debt restructuring mechanism. The creditors were absent from
\nthe negotiation because they had no representative for the
\ndialogue.<\/p>\n
Credits held by the bondholders account for 56 percent of
\nAPP's debt, worth $6.5 billion. Creditors who do not sign the
\ndebt restructuring scheme will not get credit repayment from APP,
\nwhich thus far has reached around $279 million in an escrow
\naccount.<\/p>\n
APP defaulted on $13.9 billion in debt in March 2001. That was
\none of the largest defaults in the history of emerging markets.
\nThe debt included $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
Apart from those in Indonesia, APP has also a number of
\nproduction facilities in China.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/jp13sign-1447899208",
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"sponsor": "Okusi Associates",
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