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.