APP creditors say dismayed with talks

APP creditors say dismayed with talks

Creditors of troubled Asia Pulp & Paper Co on Thursday called on the Indonesian-controlled group to show more commitment to restructuring its massive US$13 billion of debt, in a rare public statement on the state of negotiations.

In a short statement sent to the media, the creditors said they were dismayed at the pace of progress in their private negotiations with the Indonesian conglomerate.

"Particularly disappointing is that APP has apparently not yet committed itself to certain fundamental principles that the steering committee has repeatedly put forward," they said.

Singapore-headquartered APP, the largest pulp and paper group in Asia outside Japan, called a debt moratorium in March 2001 as its operations tottered under the weight of a liquidity crunch, falling pulp and paper prices and ratings downgrades.

The statement was issued by the Creditors' Combined Steering Committee, which had been tight-lipped on ongoing talks.

The committee gave APP a restructuring plan on May 2 that outlined a set of principles, which included a substantial contribution by the controlling shareholders to the restructuring exercise, debt-to-equity conversion, adoption of a cash sweep and cash waterfall for the benefit of creditors.

APP simply indicated it accepted four restructuring principles: differentiating debt into core and non-core debt; restrictions on new debt; a monitoring program and a debt buy- back program. -- Reuters