Debt ridden Asia Pulp & Paper (APP) has stopped payment of interest and principal on its debt and the debt of its units on the advice of financial advisor Credit Suisse First Boston.


The move has been made to "preserve the remaining finances of the company," and is the latest in a series of financial woes for the Indonesian-controlled pulp and paper group.


APP said that to allow its operating subsidiaries to continue trading normally, "priority will be given to servicing suppliers and creditors".


APP is also facing the prospect of another lawsuit, the ninth against the group and its subsidiaries, this time by construction firm AHC Enterprises for 472,000 over the sale of goods.


The latest writ follows one issued earlier in the week by Fibre Source International, along with others filed in Singapore by ABN Amro and Crdit Lyonnais among others for tens of millions of dollars.


The spiralling debt follows the lapse of two coupon payments by a subsidiary last month, which totalled 29.3m on 135m of bonds due to mature in August this year (PrintWeek, 23 February).


APP appointed Credit Suisse earlier this month in an attempt to help with the restructuring of its 8bn debt, and appointed JP Morgan to assist in the sale of certain assets.


Controlled by the Sinar Mas Group and owned by the Widjaja family, APP is the 10th largest paper group in the world and Indonesias second largest conglomerate.


Story by Andy Scott