IBRA signs APP debt pact but foreign creditors abstain
IBRA signs APP debt pact but foreign creditors abstain
Dow Jones, Jakarta
The Indonesian Bank Restructuring Agency, or IBRA, signed an
outline US$6.5 billion debt workout with Asia Pulp & Paper Co.
(PAP) Wednesday, but the refusal of many foreign creditors to
agree to the plan means that reaching a final restructuring is
unlikely in the near future.
In a ceremony in Jakarta, IBRA, local banks and bondholders
signed the agreement, which covers debt held by APP's four
Indonesian units. Singapore-based APP, which has operations in
Indonesia and China, stopped repaying its debt in March 2001
after years of over-borrowing.
IBRA wants foreign creditors to agree quickly to the debt
plan, and organized Wednesday's signing ceremony despite conflict
among creditors on how to proceed, say people close to the talks.
The government agency, which is APP's largest single creditor
with $1 billion in debt, has said it wants creditors to sign a
final debt agreement by May. 31.
But a number of foreign creditors have rejected the outline
debt plan. A committee representing APP's foreign bondholders
last week urged other creditors not to sign IBRA's deal Wednesday
and submitted an alternative restructuring plan to the government
agency. Foreign creditors were largely absent Wednesday from the
signing ceremony.
Under IBRA's plan signed Wednesday, the principal and interest
for about $1.2 billion of the Indonesian operations' debt will be
repaid over 10 years, while for $3 billion of the debt only
interest will be paid over 10 years, and that debt will then be
refinanced. A further $2.3 billion of debt will be refinanced
with a convertible bond. The plan assumes APP will earn an
average of $750 million a year before interest, taxes and
depreciation.
Foreign bondholders say they are concerned IBRA's debt workout
pushes for the restructuring of the Indonesian debt without
working out a plan for the Singapore holding company and China
company borrowings, which total about $7.4 billion. Creditors
holding debt from those companies might suffer, they say.
The bondholders also said IBRA's plan doesn't contain adequate
provisions to allow creditors to take control of APP from its
owners, Indonesia's Widjaya family, if they fail to keep to the
terms of the restructuring.
APP's Indonesian companies comprise PT Indah Kiat Pulp &
Paper, PT Pabrik Kertas Tjiwi Kimia, PT Lontar Papyrus and PT
Pindo Deli Pulp & Paper