Govt agrees to IBRA's deal with Guthrie

Govt agrees to IBRA's deal with Guthrie

JAKARTA (Dow Jones): The government has agreed to the sale of palm oil plantations to Malaysian firm Kumpulan Guthrie Bhd. after months of delay caused by political interference in the deal.

Indonesia's Bank Restructuring Agency, or IBRA, reached a final agreement with Guthrie earlier this week to sell the Sumatra plantations formally belonging to the Salim Group, IBRA Vice President Thomas Lembong said.

"We have surmounted all issues that needed to be resolved in order to pursue the completion of this transaction," Lembong told Dow Jones Newswires.

Both parties are likely to sign legal documents on the deal Friday.

IBRA reached an outline agreement with Guthrie in November last year, but Parliament stalled the finalization of the deal amid concern Indonesia was handing prize assets to a regional competitor.

Vice President Megawati Soekarnoputri, whose party led calls to delay the sale, earlier this week gave the go-ahead for the deal.

Guthrie agreed last year to buy 180,000 hectares of plantations, largely in Sumatra and the Indonesian side of Borneo island, in a deal worth $350 million.

But the deal appeared to stall when Guthrie asked the government to issue a confirmation letter saying that a 1999 decree setting a size limit for individual plantation companies wouldn't apply in this case.

Although the decree wasn't supposed to apply to plantation companies already in existence, Guthrie's request led to calls from Parliament to delay the sale.

IBRA then entered a round of lobbying with Megawati, finally winning approval earlier this week.

IBRA took over the plantation companies from Salim, once Indonesia's largest conglomerate, following the 1997 financial crash.