Govt offers to buy back Mexico Cemex stake in Gresik
Govt offers to buy back Mexico Cemex stake in Gresik
Dow Jones Jakarta
The Indonesian government Monday said it has offered to buy back Mexico-based Cemex SA's stake in cement maker PT Semen Gresik in an effort to resolve a dispute over control of the country's largest cement maker.
"We have met Cemex's representatives and delivered our proposal to buy back its shares in Gresik," State Enterprise Minister Laksamana Sukardi told reporters.
Cemex owns a 25.53 percent stake in Gresik while the government has a 51.01 percent stake, with the rest held by the public.
The Mexican cement company late last year filed a request with the International Center For the Settlement of Investment Disputes, a Washington D.C.-based affiliate of the World Bank, to act as an arbiter in a dispute with the Indonesian government over control of Gresik.
After years of being thwarted in its effort to complete a 1998 deal to take over Gresik, Cemex asked a panel of arbitration experts to rescind the purchase agreement and award damages to the Mexican company.
Under the 1998 agreement, Cemex paid $290 million for a 25.53 percent stake in Semen Gresik, with an agreement to increase this to 51 percent by end-2001. In mid-2001, however, the management of PT Semen Padang based in West Sumatra province launched a battle for control over the key Semen Gresik unit, preventing the government from concluding the deal. The legislature of West Sumatra province has since declared it was taking over Semen Padang to prevent it from being sold.
Semen Padang accounts for about a quarter of Semen Gresik's total cement capacity of 14 million tons a year.
Laksamana said the government will team up with state-owned pension fund PT Jamsostek to buy back the Gresik stake from Cemex.
He didn't give further details, except to say that such plan will help resolve the dispute between the two camps.
"We hope that Cemex will accept our proposal," he added.
In Mexico City, however, Cemex said on Monday it hasn't received any offer from the Indonesian government to buy back its 25.5 percent stake in PT Semen Gresik.
A spokesman for Monterrey-based Cemex said that "up until now, Cemex hasn't received any proposal from the government of Indonesia," and that the arbitration process continues.