Indofood expects stronger CPO exports<\/p>\n
JAKARTA (JP): Giant publicly listed food producer PT Indofood
\nSukses Makmur said on Friday it aimed to expand its crude palm
\noil (CPO) export market through its recent acquisition of
\nSingapore listed Golden Agri Resources, a unit of the Sinar Mas
\nGroup's Asia Food Property (AFP).<\/p>\n
Indofood president Eva Riyanti Hutapea predicted Golden Agri's
\nstrong CPO output could double Indofood's export revenue, which
\nlast year stood at US$210 million.<\/p>\n
\"Because of the deal, our export revenue doubled instantly,\"
\nshe told reporters at her office.<\/p>\n
On Thursday, Indofood announced its deal with Golden Agri to
\npurchase the latter's stake of up to 55 percent for a value of
\naround $173 million.<\/p>\n
Under the deal, Indofood's wholly owned subsidiary, Witty East
\nHoldings Limited, will initially acquire a 30 percent stake in
\nGolden Agri for $97.6 million.<\/p>\n
Through a call option agreement, Witty East may later raise
\nits stake to between 50 and 55 percent through an open market
\ntender offer.<\/p>\n
The acquisition, Eva said, could push Indofood's total CPO
\noutput this year from an estimated 300,000 metric tons to around
\n1.3 million tons.<\/p>\n
Golden Agri's oil palm plantation covers 260,000 hectares, of
\nwhich 69,000 hectares are operated by local farmers under a
\nnucleus estate-smallholder cooperation scheme.<\/p>\n
Eva estimated Golden Agri's CPO output would hit one million
\ntons this year, up from around 850,000 tons last year.<\/p>\n
Of that amount, she said, Golden Agri normally sets 40 percent
\naside for the export market.<\/p>\n
\"Our position in the international market will be much
\nstronger. Now we have the goods, without it people can dictate to
\nus,\" Eva said.<\/p>\n
She said she preferred to export most of Golden Agri's CPO
\noutput rather than used it as raw material for Indofood's food
\ndivision.<\/p>\n
Instead, she said, she would purchase the CPO for the
\ncompany's food division through the local market.<\/p>\n
\"The local market knows that we have our own oil palm
\nplantation, so they won't foul us with the price,\" she said.<\/p>\n
Under favorable international prices, she said, Indofood might
\npurchase its CPO needs entirely from the local market, allowing
\nit to export its own CPO output.<\/p>\n
Eva said the finalization of Golden Agri's acquisition
\ndepended on the outcome of its due diligence. Afterwards,
\nIndofood must also seek its shareholders approval.<\/p>\n
The due diligence on Golden Agri may take up six weeks,
\nfollowed by a general shareholders meeting, which Eva slated for
\nmid August.<\/p>\n
She admitted that Golden Agri's acquisition might burden
\nIndofood's financial performance.<\/p>\n
With last year's debts of over $400 million, and earnings
\nstill in the red, Golden Agri was what Eva called a \"challenge
\nfor Indofood management.\"<\/p>\n
Nonetheless, she was confident of having made a profitable
\ndeal given Golden Agri's potential for Indofood's growth.<\/p>\n
\"I prefer looking at a company's future value rather than its
\npast value,\" she explained.<\/p>\n
Golden Agri is the producer of the cooking oil Filma, which is
\na competitor with Indofood's own cooking oil product Bimoli.<\/p>\n
Indofood's own strength lies in the food industry, as the
\ncompany is known as the country's largest instant noodle
\nproducer.<\/p>\n
Indofood and Golden Agri are subsidiaries of two of
\nIndonesia's largest conglomerate groups, Salim and Sinar Mas
\nrespectively.<\/p>\n
The Indofood purchase of Golden Agri followed last year's
\nfailed attempt to acquire Salim's palm plantations, which were
\nput on sale by the Indonesian Bank Restructuring Agency (IBRA).<\/p>\n
IBRA acquired the plantations after the agency took over
\nSalim's loans from local banks.<\/p>\n
Indofood was denied purchase of the plantations, because IBRA
\ndid not want Salim to regain control over its assets.<\/p>\n
Malaysian palm oil giant Kumpulan Guthrie Bhd later purchased
\nthe 260,000 hectares plantations for $350 million.<\/p>\n
Eva also dismissed concerns that its deal with Golden Agri's
\nparent company AFP may run into a snag, following Sinar Mas debt
\ntroubles with foreign and local creditors.<\/p>\n
She said Indofood had \"no business\" with Sinar Mas debt woes.<\/p>\n
Sinar Mas' pulp and paper division, Asia Pulp & Paper (APP)
\nhas announced a debt standstill for payment of interests and
\nprincipals on over $12 billion in debts.<\/p>\n
But the selling of Golden Agri may concern Sinar Mas'
\ncreditors who are likely to vie for the group's assets, should a
\ndebt deal fail to materialize.(bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indofood-expects-stronger-cpo-exports-1447893297",
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