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