Friday July 31, 10:33 am Eastern Time
Asia Pulp eyes financing alternatives for machines
NEW YORK, July 31 (Reuters) - Asia Pulp & Paper Co Ltd. (PAP - news) is considering three alternatives to finance the construction of two paper machines after shelving a planned bond issue due to poor market conditions, a top company official said this week.
''We do have alternatives,'' Hendrik Tee, APP's chief financial officer, said in a conference call with investors on Thursday. ''It seems like right now we don't have a window (to tap the capital markets), so in the meantime we are putting that aside.''
APP is talking to banks and securities firms about financing the construction project through a syndicated bank loan, a future export receivables securitization, or through financing obtained from potential customers, Tee said.
The company plans to build two machines to make paper products from pulp produced from its PT Indah Kiat Pulp & Paper Corp. subsidiary. APP has referred to the machines as ''Indah Kiat paper machines No. 4 and No. 5.''
APP has already expensed $80 million for a down payment as well as civil construction on the two machines, market sources said.
The company said it is still waiting to hear whether the U.S. Export-Import Bank will provide financing for the project, the sources said.
Earlier this year, APP decided not to go ahead with a bond offering to finance the construction of the machines due to poor market conditions, they said.
Separately, APP said Thursday it is making progress in obtaining the consent of investors to increase its financial flexibility by freeing up stock pledged against $600 million in outstanding floating-rate notes, the sources said.
The company is seeking to exchange the floating-rate notes for senior unsecured obligations guaranteed by APP.
Asia Pulp & Paper is a vertically-integrated pulp and paper producer.
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