Malaysia revokes APP licenses<\/p>\n
Patrick Chalmers, Reuters, Kuala Lumpur<\/p>\n
Malaysia's Sarawak state, intent on keeping prized assets from
\ncreditors of debt-ridden Asia Pulp & Paper, has revoked licenses
\nto plant an area over three times the size of Singapore, sources
\nsaid on Wednesday.<\/p>\n
Sarawak Chief Minister Abdul Taib Mahmud has signed an order
\nreclaiming 200,000 hectares (494,000 acres) of land allocated for
\ntree planting by Borneo Pulp and Paper Sdn Bhd. (BPP), a US$1.5
\nbillion project majority-owned by Indonesia's debt-ridden APP.<\/p>\n
\"The Ministry of Resource Planning is going to release a
\nstatement tomorrow,\" a state government source told Reuters.<\/p>\n
The move follows fruitless efforts by Sarawak Timber Industry
\nand Development Corporation (STIDC) to revamp its deal with APP
\n[APUUY.PK, 60 percent owner of a venture set up in June 1996.<\/p>\n
A source close to BPP said Abdul Taib's hand was forced by a
\nrecent default notice served by creditors seeking return of a 250
\nmillion ringgit ($66 million) loan extended in March 2000.<\/p>\n
BPP signed the three-year credit facility to develop acacia
\nplantations and finance land preparation, planting maintenance
\nand related infrastructure.<\/p>\n
Allowing the default procedure to run could risk creditors'
\nseizure of BPP's planting and land use licenses, the source said.<\/p>\n
No one at lead bank Utama Merchant Bank, part of Sarawak
\nretail Bank Utama, was immediately available for comment.<\/p>\n
The seven-bank consortium includes Bumiputra-Commerce Bank
\nBhd., Bank Islam Malaysia, Bank Pertanian Malaysia, Citibank Bhd.
\nand Amanah Merchant Bank Bhd.<\/p>\n
Creditors to the Indonesian-controlled giant APP, which is $13
\nbillion in debt, have called on the group to buck up with the
\nrestructuring of its loans.<\/p>\n
The Singapore-headquartered APP, the largest pulp and paper
\ngroup in Asia outside Japan, called a debt moratorium in March
\nlast year as operations tottered under the weight of a liquidity
\ncrunch, falling pulp and paper prices and ratings downgrades.<\/p>\n
That signaled the start of major problems for its Sarawak
\njoint venture, which involves a planned mill and plantation south
\nof Bintulu on Borneo's northwest coast, said the source.<\/p>\n
BPP suffered another blow last year when a group of indigenous
\nSarawakians won legal recognition of their native rights over a
\nparcel of land leased to the company, a decision the state
\ngovernment has appealed.<\/p>\n
The source said STIDC had also filed for arbitration in
\nSingapore having become frustrated in attempts to advance the
\nproject since APP's debt crisis broke.<\/p>\n
Singapore arbitration, the proceedings of which are
\nconfidential, could bring mandated changes to the joint venture
\nincluding the buy out of APP's interests.<\/p>",
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