APP settles row over machines

APP settles row over machines

SINGAPORE (Dow Jones): Asia Pulp & Paper Co. Ltd. said Saturday it had settled disputes arising from proposals to buy two paper manufacturing machines from Beloit Corp., a subsidiary of Harnischfeger Industries Inc.

Under the settlement, APP said it would "acquire certain equipment, components and spare parts produced or acquired in connection with the paper machines, and Beloit will be paid US$135 million."

Indah Kiat, a unit of APP, would pay an initial US$25 million, with the remaining $110 million to be paid by a three-year Indah Kiat 15 percent fixed-interest note to be guaranteed by APP, the company said.

As part of the settlement, Beloit would retain a US$46 million advance, and a US$59 million promissory note given to Beloit by APP and four letters of credit would be canceled.

The dispute, which dates back to 1998, involves payment terms for the paper machines. Harnischfeger had asserted that APP was in default of payments for the machines, while APP said Beloit Asia had breached its financing obligations under the purchase contracts.