SINGAPORE, Nov. 12 (UPI) -- Asia Pulp & Paper announced Monday it will not release its proposal for a restructuring plan of its $12.4 billion debt until January, and even that date might be ambitious.
The Indonesian-owned company, one of the world's leading pulp and paper firms, was due to release its proposal this month, with a view to completing the negotiations by the end of March.
"Given the complexity of APP's restructuring, the Jan. 31, 2002, target for distribution of a restructuring plan to the umbrella steering committee remains an aggressive target, but one that we will work hard to achieve," Hendrik Tee, APP chief financial officer, said in the statement released over the weekend.
For years, APP, which has its headquarters in Singapore, borrowed heavily to fund expansion of its pulp and paper business, which branched out in Indonesia, China and India. But earlier this year, unable to repay its debt, it declared a debt-standstill, one of the largest to date in Asia.
At a meeting with its creditors last Thursday, the company said that "while significant progress has been made in developing the basis for presenting a restructuring plan, additional work was required in order to better understand a number of complex inter-creditor and inter-group issues before a restructuring plan can be presented to creditors."
With so many different subsidiaries and various types of creditors, the debt restructuring, which is being advised by Credit Suisse First Boston, is more complicated than a Chinese puzzle.
It has not helped that the company, which recently "lost" its auditor Arthur Andersen after the company resigned without explanation (at least to the press), has yet to release an audited financial statements from 2000 for its principal operating subsidiaries in Indonesia. APP is now in the process to select a new auditor.
The company also seemed to back away from a pledge to sell non-core assets to raise cash for repaying debt. While stating it would continue to explore options for the disposal, the company also said it did "not expect meaningful progress to be made in the near term, in light of the increased uncertainty in the global and emerging market economies.''
The debt standstill had not been uniform, as APP's four Indonesian units had up to now been repaying interest on rupiah-denominated bonds.
However, APP also confirmed in a statement that its subsidiary, Tjiwi Kimia, was negotiating an extension for the principal payment of its 200 billion rupiah bonds ($19.2 million) due this month.
Meanwhile, the company is still facing several class-action suits in the United States, as well as writs in the High Court in Singapore.
The actions, brought against the company, and some of its officers and directors, as well as against Arthur Andersen LLP, the auditors, allege that APP released misleading information about its finances, overstated its assets and net worth, underestimated its financial liabilities and overstated its ability to pay down debt.
As a result, the market prices of the company's securities were artificially inflated, the actions allege.
APP's American Depositary Receipts were de-listed from the New York Stock Exchange Aug. 10 after the 30-day average share price was less than $1. In fact in August the price had dropped to between 1 cent and 6 cents, from a high of $16.
Some complaints allege that APP financial statements failed to disclose that the company entered two currency-swap contracts involving Indonesian rupiah/dollars and Japanese yen/ dollars.
It was alleged these contracts had gone into negative positions, whereby APP owed money to the counterparty. In the case of the rupiah/dollar contract, APP's liability would have been a high percentage of the contract's principal amount, because of the extent of the rupiah's fall.
However, APP's financial statements did not make the appropriate adjustments to offset the risks associated with these contracts despite the representation that such adjustments were made at year-end when Arthur Andersen conducted its audit. APP only disclosed the hit in April and acknowledged the losses were not reflected in its financial statements for the period 1997-2000.
In addition, it is alleged APP and Arthur Andersen failed to write off receivables from related parties and others in a timely manner.
