Debate on Salim Group's move continues

Debate on Salim Group's move continues

JAKARTA (JP): The government sees the Salim Group's plans to
sell Indocement's 50.1 percent stake in the world's largest
noodle-maker to a Singapore-based bread-maker, QAF Ltd., as
beneficial to the shareholders, a senior official said yesterday.

"The government foresees an added shareholder value from the
proposed divestment," said Bacelius Ruru, the director general
for the supervision of state-owned enterprises at the Ministry of
Finance yesterday.

He said the transaction, to be proposed to an extraordinary
shareholders meeting next month, would lead the government to own
10.18 percent of PT Indofood Sukses Makmur (ISM) while retaining
its 25.7 percent ownership of PT Indocement Tunggal Perkasa.

"But you should not interpret my views as the reflection of
government endorsement of the proposed asset restructuring
because it will have to be decided at the shareholders meeting
next month," Ruru told reporters after closing a training course
at the finance ministry.

"This is strictly my personal view, which has yet to be
conveyed to the finance minister (the government nominee
shareholder in all state-owned companies and other firms partly
owned by the government)," he said.

The Salim family and associates control both publicly listed
Indofood and Indocement, which each account for 3.5 percent of
the Jakarta stock market capitalization.

The planned asset shuffling has, however, been drawing fire
from House members, and some analysts see the transaction as the
relocation of Indofood's assets to Singapore.

However, noted businessmen Probosutedjo, who is President
Soeharto's half-brother, expressed great concern yesterday over
the Salim Group's move, saying that one should not promote one's
business interests at the expense of Indonesia's dignity.

"I say this because this tycoon (Sudono Salim) is known by
foreign and domestic businesspeople as being very close to
President Soeharto," Probosutedjo was quoted by Antara as saying.

Probosutedjo, chairman of the widely diversified Mercu Buana
Group, said Salim should have carefully thought about the good
name of the national leader (Soeharto) before making this
corporate decision.

Probosutedjo saw the sales of Indofood to QAF in Singapore as
a capital flight and an act of tax evasion because QAF is
controlled by Indofood's majority shareholders.

Some other analysts also saw Salim's move as a disturbing
signal to foreign investors.

Ruru said his view should not be taken as a stance, which pays
more attention to the interests of shareholders rather than
national interests.

He also argued that the injection of Indofood to Singapore-
listed QAF Ltd. should not hastily be seen as a capital flight.

"We are now in a global economy, where the registration or
listing of a company in a country other than its home base has
become a trend," Ruru noted.

"That's the way we are looking at the case right now," he
said.

Under the proposed complex deal, Indocement will spin off and
sell its 50.1 percent stake in Indofood by way of giving most of
its Indofood shares to existing shareholders as a special
dividend and selling the remaining stake to the Sampoerna family,
which currently owns 5.63 percent of the noodle producer.

After that, the tiny Singapore-based bread-maker would acquire
the Salim Group's shares in Indofood through PT Marga Lestari
Abadi (a Salim company), in addition to the Indofood stake it
would buy directly from the Sampoerna family.

This would lead QAF, which is 70 percent owned by the Salim
Group, into a 50.1 percent ownership of Indofood.

To finance the acquisition, estimated at US$1.9 billion, the
Singapore-listed firm will issue rights shares.

Chairman of the Capital Market Supervisory Agency, I Putu Gede
Ary Suta, confirmed on Wednesday that Indocement had sent the
asset restructuring proposal documents to the agency last week.

"We are studying the documents right now ... and we have not
come up with any decision yet," he told reporters Wednesday,
after addressing a seminar on Asset Securitization. (aly)

Editorial -- Page 4