FOR IMMEDIATE RELEASE October 28, 2003
Phil Cogan or Bo Ollison (202) 565-3200
WASHINGTON, D.C. --- The U.S Attorney's Office for the Southern District of New York filed a lawsuit today on behalf of the Export-Import Bank of the United States (Ex-Im Bank) against Asia Pulp & Paper Co., Ltd. (APP) and three of its operating subsidiaries located in Indonesia.Ex-Im Bank is seeking to recover approximately $104 million of credits extended to these subsidiaries on which they have defaulted.Several of these transactions were guaranteed by APP itself.
In announcing the decision to file a lawsuit, Ex-Im Bank's Chief Operating Officer and General Counsel Peter Saba said, Ex-Im Bank has attempted to avoid litigation against APP, but negotiations did not conclude satisfactorily. Therefore, we have decided that the best course of action for the Bank to recover the debt owed the U.S. taxpayers is to pursue litigation in the federal courts.
Ex-Im Bank decided to oppose the final restructuring plan that has been negotiated between APP and certain of its other creditors after having been actively involved in discussions with the company and other creditors for over two years.Ex-Im Bank has participated in extensive discussions among the creditors and APP in an attempt to reach an acceptable consensual restructuring solution.On a number of occasions over the last year, Ex-Im Bank has communicated its concerns to APP and other creditors related to the terms and conditions of the proposed restructuring plan.
We had hoped that the ongoing discussions and negotiations would lead to improvements in those elements of the debt restructuring proposal that were unsatisfactory to Ex-Im Bank and as to which many other creditors also had concerns.Unfortunately, we believe that the final debt restructuring proposal is not fair and equitable to APP's creditors, and its repayment structure does not adequately reflect APP's ability to service its debt, said James Hess, Ex-Im Bank's Chief Financial Officer.
In March 2001, APP announced a standstill on the payment of debts totaling approximately $13.9 billion.Of those debts, approximately $6.7 billion relates to its Indonesian operations, principally through its four Indonesian operating subsidiaries PT Indah Kiat Pulp & Paper Tbk, PT Pabrik Kertas Tjiwi Kimia Tbk, PT Lontar Papyrus Pulp and Paper Industry and PT Pindo Deli Pulp and Paper Mills.Ex-Im Bank's lawsuit covers debt owed by each of these subsidiaries except PT Lontar.
Ex-Im Bank is an independent federal government agency that helps create and sustain U.S. jobs by financing the sale of U.S. exports, primarily to emerging markets throughout the world, by providing loan guarantees, export credit insurance, and direct loans. In fiscal year 2003, Ex-Im Bank authorized financing to support approximately $14.2 billion of U.S. exports worldwide.
The suit was filed in the U.S. District Court for the Southern District of New York on behalf of Ex-Im Bank.