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.