Bank Mandiri begins talks with investors on pulp mill sale

Bank Mandiri begins talks with investors on pulp mill sale

Dow Jones, Singapore

Bank Mandiri, Indonesia's biggest lender, has begun talks with
the family behind the US$14 billion Asia Pulp and Paper default
and other potential investors over buying a Kalimantan pulp mill
at the center of a dispute between J.P. Morgan and a Singapore-
listed company, the Financial Times reported on its Website on
Friday.

J.P. Morgan and United Fiber System Ltd. announced in June
that they planned to take over the dormant Kiani Kertas pulp mill
from a consortium led by Prabowo Subianto, the former son-in-law
of Suharto, in a deal worth $600 million in cash and debt.

According to FT, that deal fell apart in August, leading to
J.P. Morgan and UFS each trying to negotiate their own deal with
Prabowo. J.P. Morgan, Kiani's biggest foreign creditor, on
Thursday threatened legal moves to declare the company bankrupt
if the deal to sell the paper mill proved unsatisfactory.

Since August, UFS, which has begun operating the mill under a
temporary contract, has emerged as the apparent favorite.

Mandiri, Kiani's biggest domestic creditor, is understood to
be growing concerned that the talks may go nowhere.

"If a good result does not happen shortly we will do something
more actively," Ekoputro Adijayanto, Mandiri's corporate
secretary, said in the FT report. "There are many investors that
are really, actually, interested in buying Kiani Kertas."

Among those, Adijayanto said, was the Sinar Mas group, the
holding company behind APP. Gandhi Sulistiyanto, a senior Sinar
Mas executive, denied the group was interested in Kiani Kertas.

So, too, did a prominent member of the Widjaja family, which
controls Sinar Mas.

But Adijayanto said "very preliminary" negotiations had been
held with representatives for Sinar Mas and other investors.