Bakrie announces acquisition plan

JAKARTA (JP): PT Bakrie & Brothers (B&B) said yesterday it will acquire several companies included in its core businesses and procure new equipment for business diversification.

Bakrie & Brothers is a holding company with three core businesses -- telecommunications, infrastructure facility manufacturing and plantations.

"Bakrie & Brothers will acquire PT Indocopper Investama Corporation (IIC), PT Seamless Pipe Indonesia Jaya (SPIJ), PT Arutmin Indonesia (AI) and PT Catur Swasakti Utama (CSU)," Tanri Abeng, president of the company, told reporters after an extraordinary meeting of its shareholders here yesterday.

"We will also procure new equipment to manufacture 24 inch pipe and SAW pipe as part of our product diversification program." Tanri said.

The company's president said the acquisition and procurement of equipment will be financed by the proceeds of its rights share issue.

Tanri said B&B will sell 189.54 million rights shares at Rp 6,500 (US$3) per share to raise Rp 1.2 trillion ($555.56 million) in fresh funds. The current price of B&B's shares is Rp 8,200 ($3.79) per share on the Jakarta Stock Exchange and Rp 7,500 ($3.47) per share in the Surabaya Stock Exchange.

He said 49.64 percent of the funds will be used to acquire 49.01 percent of IIC's shares, 12.05 percent to acquire 37.52 percent of SPIJ's shares, 3.56 percent to acquire 20 percent of AI's shares, 3.52 percent to buy all of CSU's shares and the rest for debt repayment.

Tanri said the debt payment will eliminate B&B's debts of Rp 250 billion ($115.74 million), thereby reducing the debt equity ratio of Bakrie Group to 0.5 percent from 2.5 percent at present.

He furthermore said with the decrease in the debt equity ratio, the company's debt servicing costs will decline sharply, contributing to its profitability.

The company's after-tax profit rose by 600 percent to Rp 26.3 billion ($12.18 million) last year from Rp 4.2 billion in 1992.

During the same period, the company's total assets rose to Rp 824.92 billion ($381.91 million) from Rp 372.61 billion. (02)