<B>APP Parent Agrees to Restructuring Deal</B>

Indonesia’s Bank Restructuring Agency has agreed to a debt deal with Sinar Mas, parent company of Singapore-based Asia Pulp & Paper, involving about $1.2 billion of the conglomerate’s debts to bank Internasional Indonesia. While the government will take over $1.2 billion in loans that Sinar Mas owes to BII, Sinar Mas will not see any reduction in its total debt.

Asia Pulp & Paper Co. is coming under increased pressure to sell some assets in China and Indonesia to help finance the company’s heavy debt, according to the Wall Street Journal

APP’s total debt is between $9 billion and $10 billion. The company’s aggressive expansion strategy into third-world markets has resulted in an increase in its overall debt, which, in turn, has driven away investors.

To ease its debt load, the company, according to a number of press reports, is considering selling off some of its paper and paperboard operations, including packaging and tissue operations in China.

APP is part of the Sinar Mas group of businesses controlled by Indonesia’s Widjaja family. The Widjaja corporate empire includes plantations, food-proceesing and banking, as well as pulp and paper, reports the Wall Street Journal.

Asia Pulp & Paper has asked some of its main suppliers to accept longer payment terms and, in some cases, has been late in paying its suppliers for deliveries, according to companies that sell chemicals and other materials used in the pulp and paper industry.