Creditors to work with IBRA on APP debt
Creditors to work with IBRA on APP debt
Dow Jones, Jakarta
Indonesia's government has agreed with a number of foreign
creditors of Asia Pulp & Paper Co. to work together to reach a
restructuring plan by Sept. 30 this year for the ailing company's
US$13.9 billion in debt and obligations.
APP's steering committee - which represents hundreds of
international creditors - said in a statement Wednesday that
Indonesia has signed an agreement with the credit export agencies
of Germany, Japan, and the U.S. to work with all creditors to
reach a debt workout plan.
The company, which is based in Singapore and has operations in
Indonesian and China, stopped payments on its total debt in March
last year after years of heavy borrowing from a complex web of
global investors.
Indonesia's Bank Restructuring Agency - which is owed $1.25
billion separately by APP's parent, Indonesia's Sinar Mas Group -
had said previously it would act alone to get its cash back while
international creditors were unable to reach a debt restructuring
agreement.
Indonesia's Widjaya family, owners of Sinar Mas, has pledged
assets to the government to cover the debts, including stakes in
APP companies such as Jakarta-listed PT Indah Kiat Pulp & Paper
and PT. Pabrik Kertas Tjiwi Kimia. Creditors were concerned
Indonesia might take over those assets, leaving little for their
debt restructuring talks.
In the agreement with the export credit agencies, IBRA has
promised to share the collateral with other creditors, the
steering committee statement said.
The agreement also allows for creditors to seek representation
on APP's board, and to closely monitor the company's cash flow,
the statement said.
Last month, Deutsche Bank, a steering committee member, and
BNP Paribas filed a petition with the Singapore High Court asking
for the court to appoint an independent management for APP. The
banks said they were concerned the current management were
keeping assets from creditors.
APP must agree to the terms of a debt restructuring plan by
Sept. 30, according to the terms of Indonesia's agreement with
the credit export agencies, the steering committee said.
Progress in reaching an agreement has been slow so far due to
the huge number of creditors involved, and difficulty of getting
precise financial information on APP's previous accounts.