AOI sells stake overseas amid controversy

AOI sells stake overseas amid controversy

JAKARTA (JP): PT Artika Optima Inti (AOI), the timber division
of the Djajanti Group, will sell over 30 percent of its stake to
Malaysia Mining Corporation (MMC) despite its controversial plan
to float shares on the local stock exchanges.

MMC, one of Malaysia's major state-owned firms, will buy 31.8
percent of AOI's shares at US$147 million according to a
memorandum of understanding signed by representatives of the two
companies in Kuala Lumpur Monday.

Effendi Sasrawijaya, AOI's president, said proceeds from the
share divestment would be used to repay bank loans and to
strengthen its capital structure.

He said that AOI's plan to sell shares to the Malaysian
company had been approved by State Minister for
Investment/Chairman of the Investment Coordinating Board Sanyoto
Sastrowardoyo.

The announcement of the sale of AOI's stake to the Malaysian
company came amid controversy over the company's plan to sell
shares to the public through the domestic capital market.

MMC, listed on the Malaysian and British stock exchanges, had
evolved from being a company dealing predominantly in tin mining
to a diversified group with significant interests in engineering
and construction, manufacturing, utility development and
investment holding.

Sanyoto, who earlier gave a similar backing to the sale of
Barito Timber's stake to another Malaysian firm, described
Monday's deal as reflecting the confidence of the overseas
investors to the Indonesian economy.

Plan

Effendi said that AOI would continue with its plan of a public
offering on the local stock market despite the deal with the
Malaysian firm.

AOI's plan to float shares on the local stock market, which
was disclosed for the first time late last year, was delayed due
to lack of support from Forestry Minister Djamaludin
Suryohadikusumo.

The forestry minister, according to earlier reports, refused
to issue a letter of recommendation supporting the public
offering plan as the company, which operates a number of forest
concessions in eastern Indonesia, did not have a big enough log
supply to feed its plywood industry.

Commenting on the sale of AOI's shares to the Malaysian firm,
Djamaludin said yesterday that he had not yet received a report
about the deal from AOI's executives.

The deal is legitimate as long as the transaction involved
only the shares of the company's subsidiaries operating in the
timber industry and not those directly managing its forest
concessions, the minister remarked to newsmen yesterday on the
validity of the deal. (fhp/hen)