Krakatau Steel agreement canceled<\/p>\n
JAKARTA (JP): The government and Dutch firm Ispat N.V. have
\ncanceled a memorandum of understanding (MOU) for the purchase of
\na 49 percent stake in state-owned P.T. Krakatau Steel, an
\nofficial of the State Enterprises Management Agency said
\nyesterday.<\/p>\n
The assistant of the agency's communications division chief,
\nSofyan Djalil, told reporters that the widely criticized MOU was
\nno longer in effect starting yesterday.<\/p>\n
\"The decision to cancel the MOU was made by Ispat through its
\nfinancial consultant, Credit Suisse First Boston,\" Sofyan said.<\/p>\n
He said Ispat canceled the agreement due to its inability to
\nmeet a June 21 deadline for the completion of a due diligence on
\nKrakatau Steel at Cilegon in West Java.<\/p>\n
However, Ispat is still entitled to join other bidders for
\nKrakatau's stake through a competitive bidding process, he said.<\/p>\n
U.S. investment bank Salomon Smith Barney is in charge of the
\nKrakatau sale, Sofyan added.<\/p>\n
Agency chairman Tanri Abeng, who is also the state minister
\nfor the promotion of state enterprises, was widely criticized for
\nquietly signing the MOU on May 7 to sell 49 percent to 51 percent
\nof Krakatau's stake to Ispat.<\/p>\n
Yesterday morning, economist Wimar Witoelar told a public
\nforum that the World Bank country director in Indonesia, Dennis
\nde Tray, had asked the government to review the MOU because it
\nwas not generated transparently and was widely criticized.<\/p>\n
Wimar said de Tray had told him on the phone yesterday morning
\nthat the perceived special treatment given to Ispat could
\nencourage abuses.<\/p>\n
Early this month, Krakatau's top executives complained that
\nTanri had signed the MOU without informing them about its
\ncontents.<\/p>\n
Critics also have expressed concern that the deal would have
\ncreated a new monopoly in the domestic wire and rod market
\nbecause Ispat's unit in Surabaya, Ispatindo, was already the
\ncountry's largest producer in the industry.<\/p>\n
A copy of a letter dated June 12 addressed to Tanri from
\nSalomon Smith recommended 18 companies, in addition to Ispat, as
\nbeing eligible to bid on the Krakatau tender.<\/p>\n
The letter, a copy of which was obtained by The Jakarta Post,
\nshows that six of the companies are from the United States, five
\nfrom Japan and one each from Germany, France, Austria, Taiwan,
\nSouth Korea, Britain and Australia<\/p>\n
They include Australia's Broken Hill Proprietary Company,
\nBritish Steel Ltd., America's Pohang Iron and Steel Company,
\nGermany's Thyssen AG, and Japan's Kobe Steel Ltd., Nippon Steel
\nCorp. and Kawasaki Steel Corp. (das)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/krakatau-steel-agreement-canceled-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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