IBRA to push Sinar Mas to repay debt this month
IBRA to push Sinar Mas to repay debt this month
Dow Jones, Jakarta
Indonesia's Bank Restructuring Agency, or IBRA, said Tuesday
that it would act alone to recover debt from the Sinar Mas Group
while foreign creditors of the pulp & paper empire are unable to
come up with a restructuring plan.
IBRA Chairman Syafruddin Temenggung said IBRA will push Sinar
Mas to repay US$250 million of its total $1.25 billion debt to
the agency by the June 30 deadline, or will force the company to
sell assets, including those of Asia Pulp & Paper (PAP).
Foreign creditors of APP, a major unit of Sinar Mas, are also
trying to recoup $13.4 billion in loans after the company called
a debt standstill in March 2001 after years of heavy borrowing.
Creditors are concerned IBRA's attempts to get money from
Sinar Mas to fill the government's huge budget deficit will leave
the company with few assets left to repay privately held debt.
Monday, Deutsche Bank and BNP Paribas filed a petition at the
Singapore High Court to seek appointment of an independent
management for APP to work with the company's hundreds of
creditors while it undergoes restructuring.
The petition said creditors feared APP was hiding assets that
should be included in the restructuring.
IBRA's Temenggung fanned creditors' fears by saying he wasn't
willing to wait for creditors to come up with a restructuring
plan before Indonesia gets its money back from Sinar Mas. Foreign
investors will be reluctant to return to Indonesia while the
legal procedure for the recovery of debt remains unclear.
APP's foreign creditor steering committee, which includes
Deutsche Bank, has asked IBRA to join a debt workout program,
which includes hundreds of banks, export credit agencies and
private investors, Temenggung said.
But the talks have been bogged down by a dispute with KPMG, an
accounting firm which did a study of APP's assets for the
creditors, Temenggung said. APP is refusing to pay KPMG around
$10 million for the study, a source close to the workout said.
"I don't care about the dispute," Temenggung told reporters.
"I am willing to work closely with them (the creditors), but
please stop the clock ticking. I have to show the Indonesian
people that there's a reason for us to join you," he added.
APP has riled overseas creditors in the past by giving in to
pressure from local investors to continue making payments on
rupiah currency bonds despite the debt standstill.
The company borrowed heavily from international debt markets
in the 1990s - when Indonesia was the darling of overseas
investors - only to see its business collapse over falling paper
prices.
The Indonesian government became APP's largest single creditor
late last year when the state pumped bonds into PT Bank
Internasional Indonesia - Sinar Mas' former banking arm - to save
the institution. For years, Sinar Mas used BII to lend without
restriction to its own businesses, including APP.
Of the $1.25 billion Sinar Mas owes the government, some $1
billion is owed directly by APP.