CDC to buy shares of Harapan Sawit

CDC to buy shares of Harapan Sawit

JAKARTA (JP): Britain's Commonwealth Development Corporation
(CDC) agreed yesterday to provide US$16.8 million in the form of
a loan and equity to the Kalimantan-based Harapan Sawit Lestari.

Harapan Sawit president Supardal Danuatmodjo said $13.5
million would be provided as loans and $3.3 million would buy 20
percent of his company.

He said the loan, with a 9.6 percent annual interest, would
finance his company's oil palm estate in Ketapang, West
Kalimantan.

"We will open a 20,000-hectare oil palm estate with a total
investment of $42.8 million," he said after signing the
assistance agreement.

He said his company, which had only been involved in
saw milling, must diversify into the oil palm business because
saw milling was no longer promising.

"The saw-milling business is declining because of declining
timber production in the province," he said.

Supardal said his company was planning to build a palm oil
refinery to back up the plantation next year, which was expected
to have its first harvest in 1999.

He said the palm oil refinery, capable of processing 60 tons
of raw oil palm fruit an hour, was scheduled for commercial
production in mid-1998.

"CDC will subscribe to 20 percent of Harapan Sawit, and will
place one commissioner on our management board," he said, adding
that his company would also get management and technical
assistance from CDC.

The purchase will change the company's share ownership so that
its founder Sugito Darmawan will hold 75 percent, CDC will hold
20 percent and the company's workers 5 percent.

CDC portfolio manager Wim Iskandar said that CDC, the British
state-owned financial institution which also ran oil palm estates
in Papua New Guinea and Solomon Islands, had loaned around $30
million to Indonesian companies since 1971. (04)