Guthrie won't renegotiate deal on RI plantations

Guthrie won't renegotiate deal on RI plantations

KUALA LUMPUR (Reuters): Malaysia's Kumpulan Guthrie Bhd said on Wednesday it would not renegotiate a deal to buy palm oil estates from the Indonesian Bank Restructuring Agency (IBRA) which has not been closed for unspecified reasons.

The plantations group plans to buy 24 Indonesian plantations once held by the Salim Group for 3.6 trillion rupiah (US$381 million).

But IBRA said earlier this month the deal closure would be delayed for several weeks, leading to speculation the terms would be renegotiated. The agency provided no explanation for the delay.

Analysts say it is crucial IBRA sew up the deal to show increasingly skeptical foreign investors they are being taken seriously in the effort to revive Indonesia's battered economy. IBRA also needs to raise money to fill the country's budget deficit.

"It's an international deal...so Kumpulan Guthrie and IBRA are both working and acting in good faith," Kumpulan Guthrie chief executive Abdul Khalid Ibrahim told reporters. "We are as committed as IBRA."

IBRA also denied on Wednesday it planned to renegotiate the deal but said it faced an "uphill battle".

"I agree there is no renegotiation and I don't understand why there was a rumour of renegotiation to begin with," senior IBRA official Thomas Lembong said.

Asked if there was any deadline for the expected closure of the deal, Lembong said: "It is extremely difficult to say because it is a complex issue, we are facing an uphill battle."

Indonesian Finance Minister Prijadi Praptosuhardjo said last week the government had completed part of the delayed sale of the plantations to Guthrie.

"There are two parts, the first part has been closed. The second part not yet," Prijadi said.

Asked about reports that part of the deal will be re- negotiated, Khalid said, "We never heard from IBRA officially on that. In fact, no re-negotiation of the deal at this stage."

He added that both parties were in the process of finalizing the deal.

Khalid is due to visit Jakarta this week as part of a delegation led by Malaysian Primary Industries Minister Lim Keng Yaik's for talks on boosting sagging world palm oil prices.

Asked if reported opposition by local farmers and politicians could derail the deal, Khalid said he thought neither IBRA nor Guthrie were looking at that as a deterrent to progress.

But he said there were a number of "technical matters" that need to be resolved even after Guthrie closes the deal.

"There (are) a lot of technical matters like the position of the land, where are you building the (palm oil) mills," he said.

Khalid said as in other countries, land was a sensitive and complicated issue in Indonesia.

"Land has always been a sensitive issue. We don't see that as a major issue if you know how to handle the community where you operate," Khalid told reporters.

He said a company operating abroad must be "socially responsible to the community", adding that Kumpulan Guthrie is experienced in investing overseas, including in Indonesia.

However, Khalid said he doesn't think the opposition will derail the planned acquisition.