Indonesia seeks higher price for Semen Gresik shares<\/p>\n
Berni K Moestafa, The Jakarta Post, Jakarta<\/p>\n
The government announced on Tuesday that it would negotiate a
\nhigher price for the sale of giant cement company PT Semen Gresik
\nunder a put option agreement with Mexican-based Cemex SA de CV.<\/p>\n
State Minister for State Enterprises Development, Laksamana
\nSukardi said that although Cemex agreed to a premium price for
\nSemen Gresik's shares, the government considered the company to
\nbe worth higher than the price Cemex had offered.<\/p>\n
\"They (Cemex) are willing to spend twice the market share
\nprice, however we will try to negotiate for an even higher
\nprice,\" Laksamana told reporters on the sidelines of a seminar on
\nprivatization held by business information specialist, CastleAsia
\nand InterMatrix Communications.<\/p>\n
The government, he said, would seek to match Semen Gresik's
\nacquisition value with those in the Philippines.<\/p>\n
According to him, Cemex had acquired Semen Gresik at an
\nenterprise value of US$68 per ton. While similar acquisitions of
\ncement companies in the Philippines had been valued at between
\n$80 and $100 per ton, he said.<\/p>\n
Semen Gresik boasts an annual output capacity of 19.25 million
\nmetric tons. Its two units, PT Semen Padang and PT Semen Tonasa,
\ncontribute a capacity of 5.57 million and 3.48 million tons
\nrespectively.<\/p>\n
In 1998, Cemex entered Semen Gresik with an 11 percent stake,
\nwhich it later increased to 25.53 percent.<\/p>\n
The Mexican company agreed to the purchase, based on the
\ngovernment's promise to sell a majority stake later on under a
\nput option deal.<\/p>\n
With the deal, the government has the right to sell Semen
\nGresik at $520 million, which Cemex must accept. The deal will
\nexpire on Oct. 26.<\/p>\n
Laksamana said Cemex had agreed to the government's request to
\nextend the put option deadline.<\/p>\n
He did not say how long the delay would be, but said the
\ngovernment hoped to exercise its put option right this year.<\/p>\n
PT Cemex's Indonesia president, Francisco Noriega, however,
\ndeclined to confirm the extension, saying Cemex and the
\ngovernment had yet to meet for talks.<\/p>\n
Exercising the put option right would give the government a
\nmuch needed revenue boost to achieve this year's privatization
\ntargets.<\/p>\n
As of now, the realization of that target amounts to zero.<\/p>\n
The government has been under strong pressure to resist the
\nput option deal, from regions banning foreign control in Semen
\nGresik.<\/p>\n
Locals at Semen Padang and Semen Tonasa are demanding the
\ngovernment spin off the two units from Semen Gresik, before
\nselling to Cemex.<\/p>\n
A spin-off, however, would undermine Semen Gresik's value and
\nthus annul Cemex's put option deal.<\/p>\n
\"With the global economic situation like it is, this (put
\noption deal) is a golden opportunity,\" Laksamana said.<\/p>\n
But he added the government must heed the regions' protests
\nand seek a \"win-win solution\" with all parties.<\/p>\n
According to him, a spin-off does not necessarily mean the
\nbreak-up of Semen Gresik. Instead, it would require the
\nrestructuring of the company's organization.<\/p>\n
\"We're doing a study on how to include equal treatment and to
\naccommodate regional aspirations,\" he said.<\/p>",
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