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.