Indah Kiat (INKP IJ): Oaktree withdraws all litigation and legal case against INKP. Local news paper said that Asia Pulp and Paper group, including INKP has reach agreement with Oaktree in debt settlement and legal battle that has last for years. Oaktree has withdrawn all its litigation and legal cases against INKP. Details of the debt settlement remain unavailable but we would expect it to be either directly enters the 2005 master restructuring agreement or sold to friendly creditors which will be happy to join the 2005 master restructuring agreement. This left INKP with three more creditors under legal dispute, Bank Exim, GE Capital, and Gramercy. Gramercy and Oaktree was seen as the strongest opponent to INKP debt restructuring, thus the withdrawal of Oaktree from the case might mark the beginning of the end of legal dispute. We view positively this development. INKP reported a strong profit in 1H08 of US$180m and expects a strong 2H08 as well. On a conservative basis, we forecast US$330m net profit for this year which implies the stock is trading at 2x 2008 PE.
