Spin-off plans remain an option: Semen Gresik<\/p>\n
JAKARTA (JP): State-owned cement producer PT Semen Gresik said
\non Wednesday that plans to spin off its two cement subsidiaries
\nremain intact, despite the government's consideration of a put
\noption deal to sell the company for US$520 million.<\/p>\n
Semen Gresik president Urip Timuryono said the government may
\nstill divest Semen Gresik's two units, PT Semen Padang and PT
\nSemen Tonasa, even though the move would annul the put option
\ndeal with the Mexican-based PT Cemex Indonesia.<\/p>\n
He said reviews of the implementation of spin-off plans and
\nthe put option agreement were being conducted simultaneously.<\/p>\n
"The government and our company are investigating the most
\neffective solution," Urip said during a public presentation.<\/p>\n
State Minister for State Enterprises Laksamana Sukardi said on
\nMonday that the government would exercise its option rights to
\nsell Semen Gresik to Cemex.<\/p>\n
The government is under pressure to raise Rp 6.5 trillion
\n(US$730 million) in privatization proceeds this year as part of
\nreform targets agreed with the International Monetary Fund (IMF).<\/p>\n
Thus far, no funds have been raised through privatization and,
\nwith only four month left before the deadline, Laksamana has
\nexpressed concern over meeting the target on time.<\/p>\n
Exercising Cemex's put option deal, however, would earn the
\ngovernment US$520 million.<\/p>\n
That price would exchange to about Rp 4.63 trillion at current
\nrates, or over 70 percent of the government's privatization
\ntarget.<\/p>\n
The government secured the put option deal with Cemex in 1998,
\nwhen the latter entered Semen Gresik with a 14 percent stake.<\/p>\n
Under the deal, which expires on Oct. 26 this year, the
\ngovernment has the right to sell its remaining 51.01 percent
\nstake in Semen Gresik at a value of $1.72 a share. Cemex must
\naccept the sale offer at the agreed price.<\/p>\n
At present, the Mexican company owns 25.53 percent in Semen
\nGresik, 11 percent of which was acquired through the stock
\nmarket.<\/p>\n
Cemex's three-year campaign to become Semen Gresik's majority
\nshareholder has faced protests from local people in West Sumatra,
\nespecially those in the capital city of Padang.<\/p>\n
According to the locals, Semen Padang was built on their
\nancestors' land and should therefore remain under Indonesian
\nownership.<\/p>\n
Similar demands have been aired by people in South Sulawesi,
\nwho also want Semen Tonasa removed from the Semen Gresik group.<\/p>\n
Urip said the government must take such demands into account,
\neven though conceding to them could jeopardize the put option
\ndeal.<\/p>\n
The put option agreement is only valid if Semen Padang and
\nSemen Tonasa remain subsidiaries of Semen Gresik.<\/p>\n
Removing the two units would also require the government to
\ncompensate Cemex for the loss of value in Semen Gresik.<\/p>\n
Urip refused to speculate as to whether the government would
\nconsider a spin-off after exercising its put option right.<\/p>\n
Cemex said it was prepared to hold talks with the government
\nregarding the put option agreement.<\/p>\n
"The transaction would have a positive impact on the overall
\neconomic environment of Indonesia, fueling the optimism of the
\nfinancial and investor community," PT Cemex Indonesia president
\nFrancisco Noriega said in a statement on Wednesday.<\/p>\n
Meanwhile, Semen Gresik finance director Satriyo said he
\nbelieved that the rupiah would remain strong which would in turn
\nease the company's debt burden.<\/p>\n
Semen Gresik must repay some Rp 215 billion and another $162
\nmillion in U.S dollars by January next year, he said.<\/p>\n
Earlier this year, Semen Gresik issued bonds to secure funds
\nfor the debt payment, but then halved the issue due to sluggish
\nmarket conditions at the time.<\/p>\n
Satriyo said Semen Gresik would make up the shortfall with
\nloans of up to Rp 700 billion from Bank Mandiri.<\/p>\n
Semen Gresik said foreign exchange losses had led the company
\nto suffer a net loss of Rp 41.4 billion in the first semester of
\nthis year. (bkm).<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/spin-off-plans-remain-an-option-semen-gresik-1447893297",
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"sponsor": "Okusi Associates",
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