Govt resumes Semen Gresik talks with Cemex<\/p>\n
JAKARTA (JP): The government reopened negotiations yesterday
\nwith Mexico's Cemex SA de CV over the stalled sale of the state-
\nowned cement maker PT Semen Gresik.<\/p>\n
State Minister of the Empowerment of State Enterprises Tanri
\nAbeng said yesterday Cemex was expected to come up with a new
\nprice proposal within two weeks.<\/p>\n
\"We will start talks with Cemex today,\" he said at a breakfast
\ngathering with journalists, adding that a second bidding process
\nto top Cemex's price offer would be completed within another two
\nweeks.<\/p>\n
\"We expect a final deal can be reached within four weeks from
\nnow.\"<\/p>\n
The privatization plan has been interrupted by objections from
\nthe West Sumatran community against foreign majority ownership of
\nPT Semen Padang, a wholly owned subsidiary of Semen Gresik.<\/p>\n
The West Sumatran people hold a cultural right to the land
\nwhere Semen Padang's facilities are located.<\/p>\n
The protest caused the government to back off from the earlier
\nprivatization formula which would have allowed the strategic
\ninvestor to purchase 51 percent of the government's 65 percent
\nstake in the publicly listed firm.<\/p>\n
The government announced last week that it would only sell 14
\npercent of its share.<\/p>\n
Cemex is the preferred strategic investor for Semen Gresik
\nafter it won the initial bidding process in June by offering
\nUS$1.38 per share for a 35 percent stake in Semen Gresik, and
\nanother 16 percent to be purchased from the local stock market
\nthrough a tender offer mechanism.<\/p>\n
The status has provided Cemex with the right to top any price
\noffer made in the second bidding process, which is expected to be
\nparticipated in by Germany's Heilderberger Zement AG,
\nSwitzerland's Holderbank and France's Laferge Asia Pacific, which
\nunder the earlier scenario were to come up with a price proposal
\non Aug. 19.<\/p>\n
Semen Gresik is the first of the 12 state-owned companies to
\nbe privatized this fiscal year ending March 1999.<\/p>\n
The government expects to raise about $1.5 billion from the
\nprivatization to help finance the State Budget which is heavily
\nburdened by various subsidy committments to help the poor in
\nsurviving the current economic crisis.<\/p>\n
Under the earlier scenario, the government was expected to get
\nat least $287 million from the Semen Gresik sale.<\/p>\n
Tanri admitted that the withdrawal from the earlier scenario
\nwas a \"setback\" for the Semen Gresik privatization plan but it
\nwas needed to expedite the overall privatization program for the
\ncurrent fiscal year.<\/p>\n
\"We have to sacrifice the economic value to accommodate public
\npressure, but we hope the privatization process after this (Semen
\nGresik) will be faster.<\/p>\n
\"From now on we have to disseminate more information about the
\nprivatization program to the public so that the people will be
\nwell informed,\" he added.<\/p>\n
He also explained that the strategy for the privatization of
\nstate-owned public utilities PT Pelindo I and II (seaport
\nmanagement company), PT Angkasa Pura (airport management) and PT
\nJasa Marga (toll road operator) had been revised by only selling
\nthe business side, not the assets through a formula similar to
\nthe joint operating scheme adopted by state-owned
\ntelecommunications company PT Telkom.<\/p>\n
\"There will be not asset sales in these firms,\" he said,
\nadding that such a strategy was needed to avoid a further public
\noutcry against the privatization program. (rei)<\/p>",
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