IBRA names U.S. company preliminary buyer of APP debt

IBRA names U.S. company preliminary buyer of APP debt

Dow Jones, Jakarta

The Indonesian Bank Restructuring Agency, or IBRA, has named
Orleans Investment, a U.S. company, as preliminary winner in the
bidding for Asia Pulp & Paper Co. debt held by the agency, IBRA's
chairman said late Thursday.

APP, a Singapore-based paper maker with operations in
Indonesia and China, defaulted on US$13.9 billion in March 2001.
APP originally owed around $1 billion to IBRA, making the agency
its largest creditor. But APP's founder, the Widjaja family,
repaid some of APP's debts using shares in PT Bank Internasional
Indonesia in June 2002, reducing the outstanding debts to $880
million.

IBRA is planning to sell its holdings of APP debt before it
ceases operations in February next year.

IBRA's Chairman Syafruddin Temenggung said Orleans
Investment's bid values IBRA's share of APP debt at around $214
million.

He added APP will be given a chance to buy back its debt at a
price that is at least 1 percent above Orleans Investment's bid.

IBRA, which was set up by the government after the 1997-98
Asian financial crisis, has been working with export credit
agencies from eight European countries and Japan to try and forge
an out-of-court settlement for $6.7 billion in debt owed by APP's
Indonesian subsidiaries.

Creditors holding roughly 40 percent of the Indonesian
company's debt, including IBRA, voted in favor of the plan in
October.

But other creditors, including some which acquired APP's debt
on the secondary market in the past two years, rejected the plan
as being too lenient on APP and are trying to get a better return
through legal action.

They creditors said that the deal gives APP too much time - up
to 22 years for some tranches - to repay its debt.