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.