Surya Dumai to go public despite problems<\/p>\n
JAKARTA (JP): The forestry company PT Surya Dumai Industri
\nyesterday announced the issuance of 120 million new shares
\ndespite concerns of a possible shortage of raw materials.<\/p>\n
Minister of Forestry Djamaludin Suryohadikusumo expressed
\ndoubts yesterday over the company's ability to maintain a
\nconstant supply of raw materials for its operations.<\/p>\n
Surya Dumai's chief commissioner, Martias, said in a public
\npresentation here yesterday the company expected to raise around
\nRp 120 billion (US$52.17 million) to Rp 140 billion in fresh
\nfunds from the sale of the new shares, which will account for 30
\npercent of its enlarged capital.<\/p>\n
He said that from the proceeds of the initial public offering,
\n37 percent would be used for the development of its industrial
\ntimber estates, 20 percent for the establishment of a medium-
\ndensity fiberboard manufacturing plant, 27 percent for the
\npayment of the company's long-term loans and 16 percent towards
\nincreasing the company's working capital.<\/p>\n
Surya Dumai's president, Citra Gunawan, said the shares will
\nhave a nominal value of Rp 500 per share.<\/p>\n
Surya Dumai will be listed on the Jakarta Stock Exchange on
\nJuly 27. Acting as the lead underwriters are PT Danareksa
\nSekuritas and PT Daiwa Indonesia Securities.<\/p>\n
Citra said Surya Dumai plans to conduct international
\nroadshows at the end of this month in Singapore, Hong Kong,
\nLondon, Amsterdam, New York, Boston in the United States and
\nEdinburgh in Britain.<\/p>\n
Ecolabeling<\/p>\n
Minister Djamaludin said separately yesterday that \"Although
\ntheir raw material supply may seem adequate, remember that this
\nis only on paper. The Ecolabeling Agency will make its checks on
\nthe site, so I think we should wait for the result of their
\nstudies.\"<\/p>\n
\"I think prospective investors should be careful, but it is up
\nto them to decide whether or not to invest in the company,\" he
\nadded.<\/p>\n
Surya Dumai, a Riau-based subsidiary of the widely-diversified
\nSurya Dumai Group, conducted a presentation at the Ministry of
\nForestry on Thursday.<\/p>\n
It will be the first forest-based company to be listed after
\nbeing audited for forest management and raw material
\nsustainability.<\/p>\n
Two forestry firms -- PT Barito Pacific Timber and PT
\nSumalindo Lestari Jaya -- listed their shares on the domestic
\ncapital market before environmental sustainability became a
\nserious government concern.<\/p>\n
According to PT Sucofindo -- the surveying agency appointed by
\nthe Ministry of Forestry to audit Surya Dumai's forest management
\nand raw material sustainability -- only 52 percent of the latter
\ncompany's concession areas can be used effectively for long-term
\noperations.<\/p>\n
Sucofindo, through a desk audit, said that out of Surya
\nDumai's six concession areas, totaling 738,470 hectares, only
\n386,012 hectares (52 percent) can be categorized as \"effective,
\nproductive areas\", and can thus be relied on as a source of raw
\nmaterials.<\/p>\n
Meanwhile, Surya Dumai is also developing two timber estates
\ntotaling 65,000 hectares. But, according to Sucofindo, only
\n38,500 hectares can be effectively managed.<\/p>\n
Surya Dumai executives said that it presently has six
\nconcession areas, managed by subsidiaries PT Rokan Permai Timber,
\nPT Sri Buana Dumai, PT Kulim Company, PT Sejati Riau Trading Co.
\nI, PT Sejati Riau Trading Co. II and PT Expra Baru Utama, and
\nthree timber estates, managed by subsidiaries PT Rimba Rokan
\nHulu, PT Perawang Sukses Perkasa Industri and PT Perawang Lumber
\nIndustri.<\/p>\n
The timber estates, Surya Dumai said, have a total area of
\n97,720 hectares. However, Sucofindo's desk audit last year was
\nonly conducted for two of the estates, and excluded Perawang
\nLumber Industri which was acquired by Surya Dumai after the
\naudit.<\/p>\n
Sucofindo's audit concluded that Surya Dumai's raw material
\nsupplies -- which will come from the sustainable yields of Surya
\nDumai's concession areas, timber estate harvests (starting
\n1999\/2000) and purchasing of logs on the open market -- will be
\nsufficient to meet the minimum demand for its operations.<\/p>\n
\"Except for 1998\/1999 and 2000\/2001, when the company will
\nsuffer a deficit of six percent to nine percent of its minimum
\nindustrial requirement and will have to obtain timber from a
\nthird party,\" the report read.<\/p>\n
Surya Dumai's products include plywood, block-board, sawn
\ntimber and particle-board as well as secondary products such as
\nfancy plywood, polyester plywood and wood-working products. Most
\nof the products are exported and 90 percent of Surya Dumai's
\nrevenues come from exports.<\/p>\n
Citra said the company expects to expand its timber estates to
\n150,000 hectares. In the future, timber from the estates will be
\nused to supply the firm's plants to produce medium-density fiber
\nboard, homogeneous particle board and oriented structural board,
\nhe said.<\/p>\n
During the 1991-1995 period, Surya Dumai's sales revenues grew
\nby an average of 42.85 percent a year, reaching Rp 283.87 billion
\nin 1995. Its total assets grew by an average of 96.31 percent, to
\nreach Rp 562.08 billion last year. Its after-tax profits were
\nrecorded at Rp 28 billion last year, down from Rp 31.48 billion
\nthe year before. (pwn)<\/p>",
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