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)