APP wins reprieve from Singapore court
APP wins reprieve from Singapore court
SINGAPORE (Reuters): Debt-laden Asia Pulp & Paper (APP) has won some much-needed time and a legal reprieve after Singapore's High Court froze a creditor's winding-up proceeding and Dutch bank ABN Amro dropped three lawsuits.
APP, the world's fourth biggest paper maker by capacity, is working to restructure debt of S$12.2 billion and has already lost several court cases to suppliers and banks seeking payment.
The New York-listed, Singapore-based firm with assets in Indonesia, China and India said the High Court had granted a stay in the winding-up proceeding filed by Cellmark AB last week.
APP, which owes US$10.81 million to Cellmark, said it sought court protection to avoid having to pay immediately because it wants to set up "a restructuring plan that treats our overall creditor group in a fair and equitable manner".
"The company has made significant progress in the past three months in working towards a consensual restructuring with its creditors," it said in a statement released late on Wednesday.
"We believe that creditors representing a substantial portion of our approximately US$12.2 billion in financial indebtedness support us in this process."
Among the reasons APP, backed by its financial adviser Credit Suisse First Boston, put up to apply for a stay was that "should the company go into liquidation or news of the petition was to hit the market, it will have dire consequences for the world markets and particularly the Indonesian company."
The once powerful APP said it would make similar application for a stay, should there be any more application for winding-up.
Raymond Davis, who leads the team of financial advisers from CSFB, said in support of APP that such a stay was needed to allow time for an orderly completion and negotiation of a restructuring plan, which would provide maximum recovery for creditors of various classes.
"Where certain creditors do not honour the standstill and seek to further their interests, at the expense of other creditors, then the company has no choice but to seek a judicial stay," he said.
The group, which stopped payment of interest and principal on its debt and the debt of its units to preserve its precious cash, appealed to creditors at a meeting last month in Singapore not to seize any collateral.
APP said it was pleased ABN Amro had decided to drop its three lawsuits seeking more than US$31 million and hoped the move would encourage other creditors to abandon legal action in favor of a broad-based debt restructuring plan.
Controlled by Indonesia's second largest conglomerate, the troubled Sinar Mas Group owned by the Widjaja family, APP and several of its units were named in 10 lawsuits in Singapore.
On May 4, the High Court ruled in favor of two suppliers -- Fiber Source International Corp and Avebe (Far East) Pte Ltd -- over claims totaling US$11.5 million.
The rulings followed one in March ordering APP to pay $1.9 million to Credit Lyonnais for failing to reimburse the French bank for losses from foreign exchange contracts.
APP will be in court again on May 18 for lawsuits filed by Hong Kong-based Bank of East Asia Ltd and construction firm AHC Enterprises Pte Ltd.