<b>Asia Pulp &amp; Paper Cuts Production</b>

Asia Pulp & Paper, suffering from huge debt, declining prices, and soft demand for its finished product it cutting production.

In a statement APP, engulfed in over $12 billion of debt, said these factors were causing the company to curtail production.

``Insufficient liquidity continues to affect the company's operations. In Indonesia, excess capacity and financial distress of Indonesian producers have resulted in significant price cutting and overseas sales on unfavorable terms,'' chief financial officer Hendrik Tee said in the statement which was issued after a meeting with creditors in Singapore yesterday.

``As a result, the company has had to curtail production,'' Tee added.

In the statement, APP said in Indonesia the average selling price for its bleached hardwood draft pulp fell 46 percent to $310 per metric ton in February 2001, compared with the second quarter last year.

It said its operations in China were also suffering mainly due to ailing demand for its products, adding the average retail selling price in February at its Chinese operating subsidiaries for paper had fallen 17 percent from the second quarter 2000.

``In China, demand for the company's products has fallen short of our expectations,'' Tee said.

He said the company was also facing increased competition from Chinese and Korean producers.

It added that the company would continue its plan to divest assets in Indonesia and China to raise more needed cash.

It did not specify which assets but has previously said it wanted to sell its paper plants in China and its packaging unit in PT Indah Kiat , one of its main operating units.

The company is also finalizing the sale of its India assets. Reuters.