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)