Minister says Cemex agrees to SG spin-off proposal<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
Confusion surrounding the proposed split of cement makers PT
\nSemen Padang and PT Semen Tonasa from parent company PT Semen
\nGresik continued following a statement that a key minority
\nshareholder had approved the plan.<\/p>\n
Coordinating Minister for People's Welfare Yusuf Kalla said on
\nTuesday that Cemex SA de CV had given its approval.<\/p>\n
\"We've had informal talks with Noriega (Cemex's president in
\nIndonesia), and there is basically no problems. The response was
\nokay, they agreed to the spin-off plan,\" Yusuf was quoted by
\ndetik.com as saying.<\/p>\n
Yusuf has been appointed as the mediator to settle a long-
\nstanding quarrel between the central government and the local
\nadministrations of West Sumatra and South Sulawesi who have
\ndemanded the separation of Semen Padang and Semen Tonasa from the
\nparent company.<\/p>\n
Earlier, State Minister of State Enterprises Laksamana Sukardi
\nsaid he had sent a letter to the governor of West Sumatra, saying
\nthat the government had basically agreed to the demand, but said
\nthat it must be carried out legally.<\/p>\n
Semen Gresik (SG) owns 99 percent of both the subsidiary
\ncompanies and is currently the country's largest cement provider
\nwith a total capacity of around 17.25 million metric tons. SG is
\n51 percent owned by the government, 23.46 percent by the public
\nand 25.53 percent by Cemex.<\/p>\n
According to existing laws, any major corporate action to be
\ntaken by the publicly-listed SG should get the approval of Cemex
\nas one of the company's minority shareholders.<\/p>\n
Meanwhile, a source at Cemex said the company had never been
\ngiven any formal notice about the government's official stance on
\nthe issue.<\/p>\n
\"We've never had official communication with the government,
\nso we really cannot tell what our official position regarding the
\nmatter is,\" an official from Cemex, who asked for anonymity, told
\nThe Jakarta Post, adding that the company had not even received a
\ncopy of the letter containing the government's approval for the
\nmove.<\/p>\n
When asked about Yusuf's remarks, the source replied that any
\nmajor corporate action should be taken based on a \"formal basis\",
\nnot an informal one.<\/p>\n
There are plans now to hold an extraordinary shareholders
\nmeeting in the second week of next month to decide on the split.<\/p>\n
Yusuf said that even if everything went well, the process
\nwould take a year to complete.<\/p>\n
The conflicting statements provide the latest drama clouding
\nSG, which has long been surrounded by controversy.<\/p>\n
Cemex became SG shareholders in October 1998, when it bought a
\n25 percent stake from the government under a privatization
\nprogram. The Mexican company also has the right to buy another 51
\npercent stake in the company under a put option agreement.<\/p>\n
However, until the deal expired in October 2001, Cemex could
\nnot execute the rights due to fierce objections from people in
\nPadang (in West Sumatra) and South Sulawesi, the home province of
\nSemen Tonasa.<\/p>\n
Since then, calls for a spin-off have been increasing.<\/p>\n
The consequence, however, could prove costly.<\/p>\n
Not only will it prove detrimental to privatization plans and
\ndamage already dwindling investor confidence, the government will
\nalso have to set aside hefty compensation to SG's minority
\nshareholders if the split is carried out. These investors had
\nbought the SG shares by taking into account Semen Padang and
\nSemen Tonasa assets.<\/p>\n
If a split is to take place, the government will have to cover
\nthe price gap between those paid by the public and Cemex, which
\nwere based on assumptions that SG's output was 17.25 million
\nmetric tons, and the ones valued after the spin-off, which makes
\nthe production capacity much lower than previously.<\/p>\n
Semen Padang and Semen Tonasa have a combined production
\ncapacity of around 9 million metric tons.<\/p>",
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