Governments urge Indons to intervene in Asia Pulp & Paper Co.


JAKARTA, Indonesia (AP) - Eleven countries have urged Indonesian President Megawati Sukarnoputri to intervene in a dispute over a multibillion debt restructuring for Asia Pulp & Paper Co., one of Indonesia's largest companies. 

The restructuring of US$6.5 billion in debt has become a test case of the government's ability to reform the economy and attract foreign investment, said a letter signed by nine European nations, Japan and Canada. 

The letter said the Indonesian Bank Restructuring Agency or IBRA - which is owed US$1 billion by the paper company and is overseeing the restructuring process - has been too lenient with the company, the world's largest paper and pulp producer. 

"We advise you (Megawati) to direct your ministers to exercise the closest possible supervision over IBRA to ensure a fair, commercially reasonable and transparent restructuring'' of Asia Pulp & Paper, the letter said. 

Export credit agencies from a number of Western countries are among hundreds of creditors owed a total US$13.9 billion by Asia Pulp & Paper. 

International creditors are frustrated at what they say is IBRA's unwillingness to force stringent repayment conditions on Asia Pulp's owners, Indonesia's influential Widjaya family, sources close to the talks said. 

The Widjayas stopped servicing their debt in March 2001 amid slumping global paper prices. 

The joint letter signals that the company's debt restructuring could break out into a diplomatic row if Indonesia continues to refuse to pressure the company to repay its debts. - AP 

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