APP irks creditors, asks for more
APP irks creditors, asks for more
SINGAPORE (Reuters): Debt-laden Asia Pulp & Paper told disgruntled creditors on Monday it had obligations of US$3.9 billion on top of its direct borrowings and then tested their patience by asking for another $200 million.
In documents handed to creditors at a closed-door meeting in Singapore, the world's 10th biggest paper concern said it would release audited 2000 results in June and aimed to have a workout plan for its consolidated debt of $12.2 billion by March 2002.
APP, which also said it was looking at divesting unnamed units in Indonesia and China, did not specify the nature of the $3.9 billion in obligations for which it had acted as guarantor, but the figure could balloon its stated debt.
But what seemed to irk creditors most was the request for $200 million by September to stabilize its Indonesian operations -- after the company had frozen all interest and principal repayments on its debt last month to preserve precious cash.
"That's a bit much to ask and nobody in that room is going to give them that money," said one banker who attended the meeting. "There's no sense of urgency and no plan in place."
In a bid to encourage the taps to be turned on again, APP said the debt standstill "will be modified to accommodate new providers of working capital". In return, creditors would have to suspend any lawsuits and agree not to seize any assets.
APP's financial adviser Credit Suisse First Boston told Reuters earlier that the debt overhaul was in its early stages.
Assets of Singapore-based and New York-listed APP, run by the Widjaja family which owns Indonesia's Sinar Mas conglomerate, are centered on PT Indah Kiat Pulp & Paper, PT Pabrik Kertas Tjiwi Kimia and PT Pindo Deli Pulp & Paper.
Several APP units are due to meet creditors in Jakarta on Wednesday over the debt one analyst described last week as "mind boggling".
About 500 creditors, many of them Japanese, crammed into the session, eager to hear about APP's plans.
"Nothing came from that meeting other than the company reiterating they don't want anyone to bother them," said one fund manager. "They ask for a lot and they don't provide anything."
Participants said there was concern the powerful Indonesian bank restructuring agency IBRA, one of the group's largest creditors, would get preferential treatment in any workout.
"For now all the creditors will be treated equally but there's an understanding that may change down the line," another banker said.
In the documents seen by Reuters, APP said it was looking to establish "sustainable debt levels" for its operations in Indonesia and China by March 2002.
The structure of the creditor steering committee would be approved this month, with financial information given to restricted creditors in May -- the same month APP plans to meet the steering committee and creditors' advisers start reviews.
"The mood inside was pretty cool," said one banker who attended the meeting for a major European bank. "There were very few questions asked. They mainly focused on whether or not the company had any other skeletons in the closet."
Creditors can expect more twists and turns after APP last week disclosed it failed to factor a $220 million loss on two currency swap contracts into its financial statements.
Other creditors are also lining up to get at APP.
Singapore court documents show Dutch bank Fortis has filed a lawsuit against APP for US$7.43 million over contracts related to credit facilities and overdrafts -- bringing the total number of actions against the group and its units to 10.
Singapore's High Court ruled last month in favor of Credit Lyonnais, ordering APP to pay $1.91 million plus interest to the French bank for failing to pay for losses resulting from foreign exchange contracts.
APP's American Depositary Shares (ADS) have been suspended at $0.12 since the revelation about its derivatives losses.
The pulp and paper company is in negotiations with the New York Stock Exchange to avoid delisting because the ADS have traded below $1 for more than 30 days.