APP clarifies collateral pledge

APP clarifies collateral pledge

JAKARTA (JP): Asia Pulp & Paper Co. (APP) announced on Thursday additional information regarding the impact of the previously announced settlement agreement among the controlling shareholders of the Sinar Mas Group and the Indonesian Bank Restructuring Agency on APP and its subsidiaries.

As previously disclosed, IBRA has guaranteed, on behalf of the Indonesian Government, a total of approximately US$1.3 billion owed to PT Bank Internasional Indonesia by the Sinar Mas Group of companies, which includes APP and its subsidiaries.

The company stated that in connection with the settlement agreement: - APP's principal subsidiaries in Indonesia, PT Indah Kiat Pulp & Paper, PT Pabrik Kertas Tjiwi Kimia, PT Pindo Deli Pulp and Paper Mills, PT Lontar Papyrus Pulp & Paper Industry, PT Purinusa Ekapersada, and PT Ekamas Fortuna, each granted liens on all of their fixed assets (land, buildings and machinery), other than those fixed assets on which liens had been previously granted, to IBRA to secure the Government Guarantee in respect of the BII Obligations. - The aggregate indebtedness secured by these liens is approximately US$1.3 billion, including approximately US$1.0 billion in respect of amounts owed by APP and its subsidiaries to BII; - Purinusa, an Indonesian company approximately 96 percent of which is directly and indirectly owned by APP, has been granted options to acquire the following: (i) all of the outstanding shares of PT Publisita Perdana and PT Pangkalan Usahamaju, two companies which, together with Purinusa, are the shareholders of PT Wirakarya Sakti; and (ii) all of the outstanding shares of PT Perdagangan Perindustrian Dan Pembangunan Sadang Mas, a company which is the majority shareholder of PT Arara Abadi.

Wirakarya Sakti and Arara Aabadi hold forestry timber concessions and provided approximately 90 percent and 70 percent, respectively, of the wood used by Lontar and Indah Kiat in 2000.

The Options are valid for two years and have exercise prices that are subject to adjustment by reference to the fair market value of the relevant concession; - To further secure the BII Obligations, Purinusa has granted liens to IBRA on all the shares of Indah Kiat, Tjiwi Kimia and Pindo Deli held by it and on which liens had not previously been granted. Purinusa has also entered into a pledge agreement with IBRA with respect to both the Options and any shares acquired pursuant to the Options to secure the BII Obligations; - Purinusa has agreed to acquire 51 percent of the shares of Bank Internasional Ningbo, a Chinese bank previously majority-owned by BII. Completion of this acquisition is subject to approval by Chinese regulatory authorities.

In connection with this acquisition, Purinusa incurred liabilities of approximately US$225 million to BII.