Astra to sell stake in Toyota JV

Astra to sell stake in Toyota JV

Agence France Presse, Jakarta

PT Astra International, the country's largest automotive firm, will on Thursday sign a memorandum of understanding on the proposed sale of most of its stake in a joint venture with Japan's Toyota Motor Corp., finance director John Slack said.

Slack said Wednesday Astra was proposing to sell a 46 percent stake in PT Toyota Astra Motor, retaining just five percent.

Astra said the divestment will help it raise cash for debt repayment and is also part of its strategic shift in focus to distribution.

Slack said the non-binding agreement would help speed up the negotiations.

"It is an indication that we are seriously discussing the terms of the sale and we hope we can conclude it by the third quarter," he told financial newswire AFX-Asia.

Slack declined to comment on the pricing, saying it needs further negotiation.

The Financial Times said this week the stake is expected to be sold for up to US$200 million. It said Astra would retain a majority share in the joint venture's distribution business.

The paper quoted a source close to the deal as saying Toyota plans to use the two joint venture factories as a regional manufacturing base while moving output of sedans to Thailand.

It would use the Indonesian factories to build a new model to replace the Kijang, the high-wheelbase utility vehicle that is Indonesia's most popular car.

A debt restructuring agreement approved by creditors in December requires Astra to use 75 percent of the after-tax value of any asset sales to pay off debt. Astra now has outstanding debts of $780 million dollars.