APP raises $401m through placement
APP raises $401m through placement
HONG KONG (Dow Jones): In the latest effort by an Asian company to tap global financial markets, Asia Pulp & Paper Co. (APP) completed the placement late Thursday of 48.1 million American Depositary Receipts, raising US$404 million to help finance its operations in China.
APP is a Singapore-based paper company whose primary operations -- and controlling Widjaja family -- are Indonesian.
Unlike many other Asian companies, it expanded aggressively during the Asian crisis. The paper company, which is widely regarded as the lowest-cost paper producer in the world - plans to ramp up operations in China later this year, according to a company spokesman.
The share placement was priced at $8.40 per share, and closed in New York at $9.81 per share. Ajmal Rahman, managing director of equity capital markets at Merrill Lynch, which placed the shares, said 50% of the shares were taken up by U.S. investors, while 30 percent were Asian-based investors and 20 percent were based in Europe.
APP is not alone in turning to the markets for capital while they're receptive to Asian issuers. Earlier this week, several Hong Kong companies, including Sino Land Co., COSCO Pacific Ltd., and New World Infrastructure Ltd. issued equity or convertible bonds.
The share placement is part of a more complicated restructuring program being undertaken by APP, which is among Asia's most indebted companies. Earlier this month, APP announced plans to pay down $1.5 billion to $2 billion in debt by the end of 2001.
At the end of 1998, the company had debt obligations of more than $9 billion, in addition to hefty obligations through $1.2 billion in preferred shares.
As part of its efforts to restructure debt, APP is currently trying to swap nearly $2 billion of outstanding debt into new unsecured guaranteed mandatory convertible notes due 2002. It has also issued bonus warrants to existing shareholders as of April 19, according to Rahman. And it has announced plans to sell off non-core assets.
"They still have considerable debt to support, however the fact of the matter is they are beginning the process of deleveraging," said Rahman. He said the market responded positively to the share placement in part because of APP's plans to reduce debt.