IBRA to be asked to review APP's asset pledge
IBRA to be asked to review APP's asset pledge
JAKARTA (JP): The Capital Market Supervisory Agency (Bapepam)
said on Tuesday it might ask the Indonesian Bank Restructuring
Agency (IBRA) to review assets it has received as collateral from
the Singapore-based Asia Pulp & Paper (APP).
Bapepam chairman Herwidayatmo said he suspected APP had
pledged assets of its publicly listed units, without the
knowledge of the investing public.
"If that's the case, we may ask IBRA to review it (the asset
pledge)," Herwidayatmo told reporters on the sidelines of a
hearing with the House of Representatives' Commission IX for
financial and development planning affairs.
He said his office had been investigating the assets that were
pledged to IBRA.
APP, which is part of the country's leading conglomerate Sinar
Mas Group, announced earlier this month that it had pledged IBRA
assets worth some US$1.3 billion.
The assets are to guarantee APP's loans of Rp 12 trillion
(about US$1.05 billion) from the affiliated Bank Internasional
Indonesia (BII).
IBRA demanded Sinar Mas pledge assets worth at least 145
percent of its total debt, in exchange for the agency's agreement
to guarantee its debt to BII if Sinar Mas defaulted.
The agency has said it must guarantee Sinar Mas' debt to BII
to help secure the government's Rp 6.5 trillion recapitalization
bonds it injected into the bank.
Sinar Mas must pay the debts to BII in seven instalments, with
the last payment of 65 percent of its total debt to be settled by
Sept. 2003.
APP's collateral to IBRA includes the publicly listed PT Indah
Kiat Pulp & Paper, and PT Pabrik Kertas Tjiwi Kimia.
In its announcement, the company said it had "granted liens on
all of their (APP's units pledged to IBRA) fixed assets, among
them land, building and machinery."
But according to Herwidayatmo, APP can only pledge the shares
that Sinar Mas owns in these companies.
"One must ask the independent shareholders for permission,
whether they're willing to have their stakes pledged as
collateral to the government," he explained.
The investing public owns a 36.5 percent and 32.6 percent
stake in Tjiwi Kimia and Indah Kiat respectively.
Herwidayatmo said his office still awaited a formal
explanation from Tjiwi Kimia and Indah Kiat concerning the asset
pledge. Bapepam cannot ask for explanations from APP because the
latter is not listed here but in New York.
Until both companies give their explanations, he said, Bapepam
will neither sanction Indah Kiat and Tjiwi Kimia nor ask IBRA to
review the asset pledge.
IBRA head of asset disposals Dasa Sutantio said IBRA would
demand additional assets from Sinar Mas, if the ones pledged
violated capital market regulations.
Herwidayatmo said earlier that APP had also pledged assets of
its units that were already guaranteed to bond holders.
Indah Kiat, Tjiwi Kimia, PT Lontar Papyrus Pulp & Paper
Industry, and PT Pindo Deli Pulp and Paper Mills had issued bonds
without mentioning that they were subsidiaries of APP, he said.
Pindo Deli's annual shareholders meeting on Tuesday
disapproved the company's asset transfer to IBRA.
APP's assets are sought after by creditors, after the company
announced a standstill for debt payments of over $12 billion.
It said it needed time to improve operations, while working
out a debt restructuring deal before resuming repayments of its
debts.
APP's foreign creditors fear that the company's prime assets
will fall into the Indonesian government hands, given its
stronger position to pressure the Sinar Mas Group.
APP is the world's fourth largest paper producer by capacity,
with current annual pulp capacity of 2.3 million metric tons, and
paper and packaging capacity of 5.7 million tons.
It has 17 manufacturing facilities in Indonesia, China and
India, with markets covering 65 countries. (bkm)