Sinar Mas ready to swap assets pledged to IBRA
JAKARTA (JP): The Sinar Mas Group said on Wednesday it was willing to replace assets pledged as collateral to the Indonesian Bank Restructuring Agency (IBRA), if the asset pledge violated capital market regulations.
Sinar Mas corporate secretary Yan Partawijaya said the group would change the assets if the Capital Market Supervisory Agency (Bapepam) objected to them.
"We will look again for companies that are clean and aren't publicly listed," Yan was quoted as saying by news website, Detik.com.
He added that Sinar Mas awaited the outcome of a study on these assets by Bapepam before it could agree on an asset swap.
Bapepam earlier warned Sinar Mas from pledging assets of its publicly listed units, without the knowledge and approval of the investing public.
Sinar Mas pledged assets belonging to its subsidiary, the Singapore-based Asia Pulp & Paper Ltd, as collateral for the repayment of APP's loans worth Rp 12 trillion (about US$1.05 billion) from the affiliated Bank Internasional Indonesia (BII).
The assets were transferred to IBRA, after the agency agreed to guarantee APP's debts to BII, should Sinar Mas default on them.
Among the assets APP has pledged, are PT Indah Kiat Pulp & Paper, and PT Pabrik Kertas Tjiwi Kimia, both listed on the Jakarta Stock Exchange (JSX).
According to Bapepam, APP can pledge only shares that Sinar Mas owns in these two companies.
Yan said that Sinar Mas would understand if IBRA later rejected the assets the group had pledged to it.
"IBRA has full authority over us, we're on the weaker side; so if they demand an asset swap we will comply," he said.
Head of IBRA's asset disposal unit Dasa Sutantio has said that IBRA would have to ask Sinar Mas for other assets if the ones already pledged were in conflict with capital market regulations.
Yan, however, did not know which assets Sinar Mas would use to replace the first ones.
"We will have to monitor and screen our inventory for the replacement assets," he explained.
Bapepam chairman Herwidayatmo declined to confirm Sinar Mas' readiness for an asset swap.
"They (Sinar Mas) have only just come to hand over documents containing explanation of the asset pledge. I'm in no position to say more," he told The Jakarta Post after meeting Sinar Mas officials.
He could not tell when he expect Bapepam to complete its study on the documents, saying that Sinar Mas' asset pledge was a complex issue.
Other assets that had been pledged to IBRA, include APP units PT Lontar Papyrus Pulp & Paper Industry, and PT Pindo Deli Pulp and Paper Mill.
As the two companies have issued bonds in the local market, APP should also have sought the approval of their bond holders for the asset pledge.
Herwidayatmo had said earlier that the prospectuses of the two companies failed to mention that they were units of APP.
Pindo Deli's annual shareholders on Tuesday disapproved the company's asset pledge to IBRA.
APP, the world's fourth largest paper producer, is based in Singapore.
It has announced a standstill for debt payments of over $12 billion, saying it needed time to improve operations while working on a debt restructuring proposal.
The move prompted APP's creditors to scramble for securing the company's assets on concerns it might default on payments.
They feared that APP's prime assets would fall into the Indonesian government hands, which is in a better position to strike a deal with the Jakarta-based Sinar Mas Group.
An agreement by Sinar Mas to replace the assets pledged to IBRA would further diminish creditors' chances to seize APP's assets in case of a liquidation. (bkm)