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.