United Fiber set on Kiani buy regardless of adviser
United Fiber set on Kiani buy regardless of adviser
Soraya Permatasari, Bloomberg/Jakarta
Singapore's United Fiber System Ltd. will press ahead with a plan to acquire PT Kiani Kertas in Indonesia regardless of whether Deutsche Bank quits advising on the sale because of pressure from environmental groups.
"The wheels are already turning on the deal because the sales and purchase agreement has been signed and the financing is already in place, irrespective of whether Deutsche Bank is in the deal or not," Kishore Dass, chief executive officer of United Fiber, said in a telephone interview on Saturday.
He said he's not aware of whether Deutsche Bank is quitting.
Deutsche Bank may quit as adviser to United Fiber, a forestry company, amid pressure from environmentalists who are concerned the Indonesian company is damaging the forests in Borneo, the Financial Times reported on Friday.
A withdrawal by Deutsche may lead to a collapse of the proposed US$600 million acquisition of Kiani, a pulp seller, by United Fiber, the newspaper said.
The newspaper cited a letter from Michael Holz, Deutsche's group compliance officer, which said the bank was "on hold pending the outcome" of a Jan. 18 meeting with the campaigners.
Jason Collins, a spokesman at Deutsche Bank AG in Singapore, declined to comment on the report.
Dass said Deutsche Bank had indicated to United Fiber it is under "a lot of pressure from NGOs," or non-government organizations, and that it's going to meet environmental groups in the middle of January to try to alleviate the issue.
The Singapore company "uses only legally sourced plantation wood for our operations in Kiani Kertas and maintaining the sustainability of our plantation raw materials is one of UFS's key responsibilities," Dass said.
Earlier this month, Kingsclere Finance Ltd., owned by Indonesian businessman Wisanggeni Lau, signed a conditional sales and purchase agreement to acquire Kiani Kertas from its shareholders.
That agreement takes effect at the end of the month, Dass said. United Fiber will then take over Kiani under a separate agreement with Kingsclere, Dass said.
The Singaporean company's bid may also collapse if Indonesia's Sampoerna family gets approval from Kiani's shareholders and creditors to buy the pulp mill.
Indonesian businessman Putera Sampoerna, who in May raised about $2 billion selling control of his cigarette business, on Dec. 21 offered to pay shareholders $200 million in cash for the whole of Kiani and settle $170 million of its debt to PT Bank Mandiri, the pulp seller's biggest domestic creditor.
Mandiri said on Dec. 21 it won't agree to any settlement unless the bank can recover all the $201 million in principal debt owed by Kiani.
Kiani Kertas's shareholder Prabowo Subianto had until yesterday to decide whether to accept Sampoerna's offer, PT Danareksa, which is advising Mandiri, said on Dec. 21.
Lin Che Wei, Danareksa's President, yesterday declined to comment when asked about Prabowo's response on Sampoerna's offer. Lin, Prabowo, and Agus Martowardojo, Mandiri's president met on Friday at the lender's headquarters in Jakarta.
JPMorgan Chase & Co., the biggest contributor of $120 million in credit arranged by Japan's Sumitomo Mitsui Banking Corp. for Kiani Kertas, declined to comment on the issue.
JPMorgan has withdrawn from a group bidding to acquire Kiani Kertas, the Financial Times reported on Aug. 25, citing unidentified people familiar with the plan. JPMorgan left the group after a disagreement on the terms of the transaction for the company, FT said.
Kiani Kertas's total principal debt to overseas creditors is at about $120 million, said Corporate Secretary Agus Suprayogi.