U.S. creditors file petition against APP in Riau
U.S. creditors file petition against APP in Riau
Dow Jones, Jakarta
Two U.S. creditors to Asia Pulp & Paper Co. have launched
legal proceedings in Indonesia to foreclose on the paper-making
facilities of APP's listed Indonesian subsidiary, PT Indah Kiat
Pulp & Paper, which were used as collateral to secure an unpaid
debt of US$485.7 million owed to the creditors.
The foreclosure petition, filed by PT Bank Mizuho Indonesia on
behalf of U.S. fund managers Gramercy Advisors LLC and Oaktree
Capital Management LLC, was accepted by a district court in
Bengkalis, Riau. The court ordered Indah Kiat to appear on or
before Nov. 13 to settle its obligations to the noteholders.
A spokesperson for APP declined to make an immediate comment
on the action, but APP representatives in the past have said they
believe the foreclosure strategy has little chance of success.
APP and Indah Kiat have the right to appeal the motion.
While foreclosure motions against large companies rarely
succeed in Indonesia, the move is part of a multiple-prong
strategy by the U.S. fund managers to recover debts owed by APP
and its units. The same creditors have also sued APP in U.S.
court, and say they intend to claim any APP assets in that
country if they win the case.
APP - the world's 10th largest paper-maker - defaulted on a
total of $13.9 billion in debt in March 2001. APP has proposed a
restructuring plan for $6.7 billion of that debt owed by its
Indonesian units, but many creditors find the terms of that deal
unattractive and are seeking other ways to get a better return.
The U.S. Export-Import Bank has also sued APP in U.S. court to
try to recover some $104 million owed by APP and its units.
"This foreclosure action was prompted by the continued
unwillingness of APP to fairly deal with its secured creditors in
its restructuring process. Until such time as APP adheres to
customary international restructuring practices, including
preferential treatment for secured noteholder claims, the secured
noteholder group intends to continue to act to protect and
preserve its rights as secured creditors," a lawyer for Gramercy
and Oaktree said in a statement.
The statement said the creditors will attempt to seize Indah
Kiat's two pulp mills at its plant in Perawang, Riau, and all of
the machinery and equipment located there.