Govt demands a premium for Indofood stake sale

JAKARTA (JP): The government will sell its 10.18 percent stake in PT Indofood Sukses Makmur at a higher price than that received by the Salim Group in its recent deal, State Minister of the Empowerment of State Enterprises Tanri Abeng said on Friday.

Tanri said that selling its shares in Indofood, the world's largest instant noodle maker, was the top priority for the government. The government plans to unload its equity investments in several publicly listed private companies.

"But we will not sell if the price is below our expectations. We want a higher price than that offered to the Salim Group," he told reporters after launching the government's plan for the restructuring of state-owned companies.

He said that President B.J. Habibie was expected to endorse the plan to sell the investments at a monthly meeting with senior economic ministers later in the afternoon.

"Once the President gives his approval we will immediately make the calculation (of the expected price)," he said.

He added that the government would announce further details of the planned Indofood stake sale on Wednesday, after Habibie's approval and further discussions with other related ministers.

Indofood announced on Wednesday that its controlling shareholder, the Salim Group, would sell a 60 percent stake in the company to the Hong Kong-listed First Pacific Co. and Japan's Nissin Food Products Co.

The Salim Group, Indonesia's largest conglomerate, currently controls 62.66 percent of Indofood. The public owns a 27.16 percent share in the company and the Indonesian government holds the remaining portion.

Although Indofood declined to disclose the transaction value of the sale of the 60 percent stake until the deal is finalized, which is expected to be in February 1999, Dow Jones News Wires said that the transaction would cost First Pacific and Nissin US$570 million, or Rp 3,950 per share.

The current economic crisis has resulted in a huge state budget deficit for the government, and the sale of state assets is one of the options to finance the deficit.

Tanri said that the government's investment in publicly listed cement maker PT Indocement was included on the list of equity investments to be unloaded. He provided no further details.

He also said that publicly listed auto maker PT Astra International was not on the list, because it was an indirect government investment via the Indonesian Bank Restructuring Agency (IBRA), which received its shares in Astra from troubled banks as repayment of loans injected by the central bank.

International Monetary Fund Asia Pacific director Hubert Neiss warned the government in October not to sell IBRA's assets in a "fire sale" amid depressed market conditions that would only result in low prices. (rei)