Riau Andalan sells assets to pay debts

JAKARTA (JP): PT Riau Andalan Pulp & Paper (Riaupulp) is selling its nonproductive assets to repay its bonds and other long-term debts, according to a company senior executive.

W. Michael Verge, the company's director of finance, said some of the assets had been sold, including a 135-megawatt power generator worth US$266 million.

"The power plant has been sold to PT Riau Prima Energi," he said, adding that the company's a $141-million chemical plant would be sold to PT Inti Indorayon Utama (IIU).

He said the other assets such as hotels and property were also for sale.

Riaupulp, a pulp producer based in Riau province, planned to pay the bonds issued by its subsidiary Rapp International Finance at 101 basis points over treasuries.

The bond holders previously objected to the plan, saying it would cause them millions of dollars in losses, as the bonds were sold at 105 on the market.

Verge said it has been agreed in the obligation contract that the company can pay its bonds at 101 basis points as long as its asset selling exceeded 25 percent.

"Everything we did is legal," he was quoted by the daily Bisnis Indonesia as saying over the weekend.

Verge said Riaupulp, 98 percent of which is owned by publicly listed Asia Pacific Resources International Holdings, must also protect its shareholders and not just the bond holders. (02)