Astra to allocate $120m for share purchase, capex

Astra to allocate $120m for share purchase, capex

Rendi A. Witular, Jakarta

Automotive kingpin PT Astra International said it would
allocate a huge amount in funds this year to purchase more shares
in subsidiaries and for capital expenditure.

"We plan to allocate at least US$120 million this year to
purchase more shares in subsidiaries and to finance our
expenditure," said Astra finance director John S.A. Slack after
attending the company's annual shareholders meeting on Thursday.

Slack explained that between $40 million and $50 million would
be allocated to increase Astra's ownership in PT United Tractor
(UT) and PT Astra Agro Lestari (AAI) respectively, with another
$20 million for capital expenditure (capex).

As for the remaining $10 million, Slack refused to disclose
the purpose of the allocation, but analysts believed that the
funds would be used to inject more capital into the company's
financing subsidiary, PT Federal International Finance.

Slack said that with the allocated funds, Astra had expected
to be able to become a majority shareholder in UT, a publicly
listed heavy equipment supplier, and around 72 percent in AAI, a
publicly listed plantation company.

At present, Astra has a 49 percent shareholding in UT and 65
percent in AAI.

Astra's decision to raise its stake in AAI is to honor a
commitment agreed in 1995 with businessmen Edwin Soeryadjaya (the
son of Astra's former owner and founder) to buy 7 percent of his
shares in AAI at a 70 percent premium price.

Slack said that Astra had decided to allocate such a huge
investment after it received debt release date status from its
creditors in March, due to the company's ability to trim its
outstanding debt to $247 million from around $1.1 billion in
1999, when the first debt restructuring deal was signed.

Before receiving the status, Astra had been subject to certain
restrictions on capital expenditure.

This year, Astra plans to reduce its debts by around $40
million to below $200 million. Of the company's total debts,
around 88 percent are dollar-denominated, while the remainder are
in rupiah.

Elsewhere, Astra shareholders approved the company's plan to
allocate Rp 220 per share for final dividend payment this year.
The amount is equal to 25 percent of the company's 2003 net
income, excluding gains from extraordinary revenues.

Astra shares ended higher by Rp 100, at Rp 5,750 on the
Jakarta Stock Exchange on Thursday, while AII ended higher by Rp
25, at Rp 2,475. But UT failed to follow suit as its shares
declined by Rp 25 to Rp 975.

A third of Astra shares are owned by Singapore-based Cycle &
Carriage Ltd.

Astra suffers from rupiah woes

PT Astra International has said the current sharp depreciation
in the rupiah against the U.S. dollar is creating losses for the
company due to its dollar debt load.

Company finance director John S.A. Slack said that for every
Rp 100 drop in the value of the local unit, Astra would suffer
some Rp 5 billion (about US$540,000) in losses.

He said that the company had assumed an average exchange rate
of Rp 8,700 per dollar.

The rupiah has been under pressure during the past couple of
weeks, falling to a 19-month low of Rp 9,290.

"For Astra alone, and not consolidated, if the rupiah drops by
Rp 100 we will suffer currency losses of about Rp 5 billion, as
we still have unhedged, dollar-denominated debts of about $50
million," said Slack.

However, he was optimistic that the losses might not be that
significant to Astra in the end, because there was a good
likelihood that the rupiah would rise again. -- JP