Govt resumes Semen Gresik talks with Cemex

Govt resumes Semen Gresik talks with Cemex

JAKARTA (JP): The government reopened negotiations yesterday
with Mexico's Cemex SA de CV over the stalled sale of the state-
owned cement maker PT Semen Gresik.

State Minister of the Empowerment of State Enterprises Tanri
Abeng said yesterday Cemex was expected to come up with a new
price proposal within two weeks.

"We will start talks with Cemex today," he said at a breakfast
gathering with journalists, adding that a second bidding process
to top Cemex's price offer would be completed within another two
weeks.

"We expect a final deal can be reached within four weeks from
now."

The privatization plan has been interrupted by objections from
the West Sumatran community against foreign majority ownership of
PT Semen Padang, a wholly owned subsidiary of Semen Gresik.

The West Sumatran people hold a cultural right to the land
where Semen Padang's facilities are located.

The protest caused the government to back off from the earlier
privatization formula which would have allowed the strategic
investor to purchase 51 percent of the government's 65 percent
stake in the publicly listed firm.

The government announced last week that it would only sell 14
percent of its share.

Cemex is the preferred strategic investor for Semen Gresik
after it won the initial bidding process in June by offering
US$1.38 per share for a 35 percent stake in Semen Gresik, and
another 16 percent to be purchased from the local stock market
through a tender offer mechanism.

The status has provided Cemex with the right to top any price
offer made in the second bidding process, which is expected to be
participated in by Germany's Heilderberger Zement AG,
Switzerland's Holderbank and France's Laferge Asia Pacific, which
under the earlier scenario were to come up with a price proposal
on Aug. 19.

Semen Gresik is the first of the 12 state-owned companies to
be privatized this fiscal year ending March 1999.

The government expects to raise about $1.5 billion from the
privatization to help finance the State Budget which is heavily
burdened by various subsidy committments to help the poor in
surviving the current economic crisis.

Under the earlier scenario, the government was expected to get
at least $287 million from the Semen Gresik sale.

Tanri admitted that the withdrawal from the earlier scenario
was a "setback" for the Semen Gresik privatization plan but it
was needed to expedite the overall privatization program for the
current fiscal year.

"We have to sacrifice the economic value to accommodate public
pressure, but we hope the privatization process after this (Semen
Gresik) will be faster.

"From now on we have to disseminate more information about the
privatization program to the public so that the people will be
well informed," he added.

He also explained that the strategy for the privatization of
state-owned public utilities PT Pelindo I and II (seaport
management company), PT Angkasa Pura (airport management) and PT
Jasa Marga (toll road operator) had been revised by only selling
the business side, not the assets through a formula similar to
the joint operating scheme adopted by state-owned
telecommunications company PT Telkom.

"There will be not asset sales in these firms," he said,
adding that such a strategy was needed to avoid a further public
outcry against the privatization program. (rei)