Malaysia revokes APP licenses
Malaysia revokes APP licenses
Patrick Chalmers, Reuters, Kuala Lumpur
Malaysia's Sarawak state, intent on keeping prized assets from
creditors of debt-ridden Asia Pulp & Paper, has revoked licenses
to plant an area over three times the size of Singapore, sources
said on Wednesday.
Sarawak Chief Minister Abdul Taib Mahmud has signed an order
reclaiming 200,000 hectares (494,000 acres) of land allocated for
tree planting by Borneo Pulp and Paper Sdn Bhd. (BPP), a US$1.5
billion project majority-owned by Indonesia's debt-ridden APP.
"The Ministry of Resource Planning is going to release a
statement tomorrow," a state government source told Reuters.
The move follows fruitless efforts by Sarawak Timber Industry
and Development Corporation (STIDC) to revamp its deal with APP
[APUUY.PK, 60 percent owner of a venture set up in June 1996.
A source close to BPP said Abdul Taib's hand was forced by a
recent default notice served by creditors seeking return of a 250
million ringgit ($66 million) loan extended in March 2000.
BPP signed the three-year credit facility to develop acacia
plantations and finance land preparation, planting maintenance
and related infrastructure.
Allowing the default procedure to run could risk creditors'
seizure of BPP's planting and land use licenses, the source said.
No one at lead bank Utama Merchant Bank, part of Sarawak
retail Bank Utama, was immediately available for comment.
The seven-bank consortium includes Bumiputra-Commerce Bank
Bhd., Bank Islam Malaysia, Bank Pertanian Malaysia, Citibank Bhd.
and Amanah Merchant Bank Bhd.
Creditors to the Indonesian-controlled giant APP, which is $13
billion in debt, have called on the group to buck up with the
restructuring of its loans.
The Singapore-headquartered APP, the largest pulp and paper
group in Asia outside Japan, called a debt moratorium in March
last year as operations tottered under the weight of a liquidity
crunch, falling pulp and paper prices and ratings downgrades.
That signaled the start of major problems for its Sarawak
joint venture, which involves a planned mill and plantation south
of Bintulu on Borneo's northwest coast, said the source.
BPP suffered another blow last year when a group of indigenous
Sarawakians won legal recognition of their native rights over a
parcel of land leased to the company, a decision the state
government has appealed.
The source said STIDC had also filed for arbitration in
Singapore having become frustrated in attempts to advance the
project since APP's debt crisis broke.
Singapore arbitration, the proceedings of which are
confidential, could bring mandated changes to the joint venture
including the buy out of APP's interests.