APP units estimate smaller losses in 2001

The Jakarta Post, Jakarta

The two Indonesian units of Singapore-based Asia Pulp & Paper Company Ltd (APP) said their financial losses for 2001 would come in smaller than in 2000, but more because they cut provisions rather than improved operations.

Publicly listed PT Indah Kiat Pulp & Paper and PT Pabrik Kertas Tjiwi Kimia reported unaudited losses of US$203 million up until the ninth month of 2001.

For 2000 their combined net losses were $760.4 million.

Tjiwi chief financial officer Gunawan Taslim said that for 2001, he expected the company to remain in the red albeit better than in 2000.

"We had no price discounts and provisions on trade receivables last year," Gunawan explained to reporters after the two companies' general shareholders meeting on Tuesday.

Provisions are one-time expenses which are incurred when absorbing the risk of doubtful trade receivables.

Tjiwi provisions in 2000 amounted to $144 million on overseas trade receivables.

For the same year, Tjiwi also granted price discounts worth $127.67 million for overseas trade partners.

Gunawan said the price discounts and provisions made in 2000 were no longer reflected in the 2001 balance sheets.

As of Sept. 30 last year, Tjiwi still reported doubtful trade receivables with affiliated parties worth $108.91 million.

For the same period, Indah Kiat reported doubtful trade receivables worth $410.86 million of a total of $920.01 million.

Indah Kiat chief financial officer Hendra Kosasih however said that no provisions were made for that year.

"We made provisions only in 2000 not in 2001," he said without explaining.

Indah Kiat's Hendra said prices of pulp and paper remained relative stable in 2001, dashing hopes of higher sales revenue.

Tjiwi and Indah Kiat are APP's main operations here, and their performance heavily affects the repayment of around $13.9 billion in debts APP owes local and foreign creditors.

APP early last year suspended payment of its debts as revenue fell due to sagging pulp prices, and amid what analysts said over expansions in China and Indonesia.

It is the largest default in Asian debt market history, prompting foreign investors to desert the Indonesian bond market for almost the entire year in 2001.

APP is in talks with creditors to restructure its massive debts, with a deal expected toward the end of this year.

By July 2002, APP hopes to clinch an umbrella agreement with creditors to work out debt restructuring schemes for each of its units, according to Tjiwi's Gunawan.

He said Tjiwi and Indah Kiat's 2001 annual reports could not be released until a debt restructuring deal was in place.