Econ has option to own 31% stake in Centralindo
Econ has option to own 31% stake in Centralindo
SINGAPORE (Reuters): Econ International Ltd said yesterday it
had signed conditional agreements to subscribe for US$66.65
million exchangeable notes, which could be exchanged for shares
in an Indonesian telecommunications firm.
The notes, to be issued by PT Putramitra Luhursejati and PT
Mitramarga Senalestari, could be exchanged for a 31 percent stake
or 12,090 shares in PT Centralindo Panca Sakti, construction-
based Econ International said in a statement.
If exercised, the option could translate to a transaction
value of US$215 million for the entire issued share capital of
Centralindo, the statement said.
The notes will have a term of five years with an option to
Econ to extend their maturity for a further two years and will
carry a coupon rate of one percent a year on the principal.
Econ has also been granted an option to buy either a nine
percent stake or 3,510 Centralindo shares held by the issuers for
US$19.35 million or subscribe for additional notes totaling
US$19.35 million, the statement said.
"The company believes that the opportunities in
telecommunications in Indonesia are very attractive as a result
of the increasing demand for telecommunications services," Econ
said on its proposed diversification.
It said Indonesia's fixed lines and cellular penetration rates
remain the lowest in the world at 2.1 percent and 0.3 percent
respectively.
"The greatest growth potential lies in Centralindo's mobile
cellular license," it said.
It said the International Telecommunications Unit estimated
there would be up to five million cellular subscribers in
Indonesia by 2000.
"This implies a forecast cellular subscriber annual compounded
growth rate of approximately 73 percent," Econ said.
It said there was also "considerable potential" for
Centralindo's 26 percent interest in PT Surya Citra Televisi
(SCTV), one of the five private broadcast companies in Indonesia
with 20 percent market share of viewers.
"With the acquisition, the company intends to establish
telecommunications and media as a new area of business and to
explore further opportunities in the Asia Pacific region," it
said.
Econ added it intends to develop infrastructure activities,
including telecommunications network services and media
broadcasting systems, as one of its core areas.
It said the transaction would be financed by internal
resources and bank borrowings.
NM Rothschild & Sons (Singapore) Ltd has been appointed
financial advisors to Econ on the transaction.