Bakrie & Brothers delays $2b in projects
JAKARTA (JP): Publicly listed PT Bakrie & Brothers, one of Bakrie Group's three holding companies, said yesterday the country's financial turmoil had prompted the company to delay or review expansion projects worth US$2 billion.
Bakrie & Brothers chief commissioner Indra U. Bakrie said the company decided to postpone its steel plant, paraxyline and cement projects to cope with rising costs stemmed from the currency crisis.
"Around July, August and September, when the crisis began to get worse, we not only had to stop our expansion, but also had to review and postpone some projects we had agreed to invest in but which had not received funding," Indra said.
He said the company had to delay the steel plant project located in Lampung, in southern Sumatra. The project, a joint venture with British Steel, was estimated to cost about $800 million, he said.
Indra said the company decided to review its plan to build a paraxyline plant in Merak, West Java, in which it had a 20 percent share, due to the monetary upheaval, which had caused the rupiah to drop by over 50 percent against the U.S. dollar since early July.
The project is a joint venture with Japan's Mitsubishi Kasei corporation.
Indra, who recently replaced Bakrie Group chairman Aburizal Bakrie as Bakrie & Brother's chief commissioner, said his company also had to review its $400 million cement plant project in Central Java.
Indra said his company also planned to sell private placement in some of its strategic businesses as part of business consolidation in coping with the monetary crisis.
This included a 20 percent stake in the coal mining project of Arutmin, he said.
"We are offering our stake in the project for $50 million," he said.
He said the company also planned to sell its 25.5 percent stake in the $500 million investment of Bakrie Kasei Corp, and its 25 percent stake in a $1.4 billion energy project.
Proceeds of the sales would be used to repay the company's maturing foreign loans, he said, adding its foreign loans which were due to mature within the next three months totaled about $125 million.
"The proceeds of the sales of our private placement in the three strategic projects would be sufficient to repay these maturing debts, he said.
Besides selling their stake in the three projects, the company might also issue rights shares.
Indra said 95 percent of the company's foreign loans had been hedged since September at Rp 2,450 against the U.S. dollar. The dollar is now worth over Rp 5,000.
In efforts to improve efficiency and productivity, Bakrie & Brothers restructured its management, including its directors and commissioners.
The company's board of directors consists of Nalinkant Rathod, Arun Bhatia, Lukman Arief, Bambang Hidayat, Raniwati Malik and Darwin Silalahi. Its president and chief executive officer is Tanri Abeng.
Indra said Bakrie & Brothers would stop further expansion and would focus on its core businesses of telecommunications, agribusiness and infrastructure.
Bakrie Group's two other holding companies are PT Bakrie Investindo and PT Bakrie Capital Indonesia.
Both Bakrie Investindo and Bakrie Capital are 100 percent owned by the Bakrie family.
Bakrie & Brothers is 51 percent owned by the Bakrie family through Bakrie Investindo, while the remaining 49 percent stake belongs to public shareholders.
Indra said the company's revenue in the first three quarters of this year rose 30 percent to Rp 1.4 trillion over the same period in 1996. Its net income jumped by about 115 percent to Rp 219 billion in the same period.
As of Sept. 30 this year, the company's total assets were Rp 6.5 trillion compared to Rp 4.6 trillion in the same period, while its liabilities were Rp 4.41 trillion compared to Rp 2.8 trillion. (das)