INDONESIAN billionaire Putra Sampoerna may not be as close to clinching a deal to buy a Kalimantan pulp mill as was earlier reported in the Indonesian press.

　　Sources close to Mr Sampoerna yesterday distanced him from media reports in Indonesia this week that described the businessman as being close to reaching a deal with the mill's largest creditor, Bank Mandiri.

　　'Nothing has been signed or agreed on with Mandiri. There is an ongoing discussion and the transaction must make commercial sense before it can go through,' said the sources. They said Mr Sampoerna agreed only to assess the deal after being invited with several other parties last year to bid for the heavily indebted mill, Kiani Kertas.

　　Yesterday's clarification is the latest twist in a tangled battle involving Bank Mandiri, Mr Sampoerna and United Fiber System (Unifiber), which claims it has an 'iron-clad' agreement to buy the mill.

　　One sticking point seems to be the US$201 million (S$330.4 million) owed by the mill to Bank Mandiri. On Monday, the Jakarta Post newspaper quoted Bank Mandiri's spokesman as saying that the bank favoured Mr Sampoerna's offer because he had agreed to pay back the debt in full. Unifiber's proposal involved a series of instalments.

　　But the bank left the door open for Unifiber to submit another offer, which would allow the bank to 'assess where the funds come from, and Unifiber's commitment in paying for the offer'.

　　Unifiber chief executive Kishore Dass responded by threatening to walk away from the deal rather than be drawn into a bidding war with Mr Sampoerna.

　　'We will...not hesitate to walk away from a transaction in the event that the financials no longer make economical sense,' he said in a statement to the Singapore Exchange yesterday.

　　Mr Dass said Bank Mandiri's actions were directed at getting a bid that involved a lump sum repayment of the mill debt. This view was shared by other observers who noted that Bank Mandiri favoured Mr Sampoerna because he has the cash to pay off Kiani's debts in full, after making about US$2 billion from selling his cigarette business to tobacco giant Philip Morris last May.

　　And Unifiber's bid remains unimpressive. It has said it has the financing in place but is bidding for an asset reported to be worth at least US$600 million as compared with its own market value of S$506 million.

　　The mill, one of Indonesia's largest, can produce 525,000 tonnes of pulp yearly. Operations are slowly reviving after management was taken over by Unifiber late last year, after earlier stopping for lack of working capital.

《The Straits Times》