Heidelberger export deal 'won't hurt domestic sales'

Heidelberger export deal 'won't hurt domestic sales'

JAKARTA (JP): Publicly listed cement company PT Indocement
Tunggal Prakarsa said on Thursday that its export agreement with
a distribution unit of German cement producer Heidelberger Zement
AG would not hurt Indocement's domestic sales.

Indocement director Benny Setiawan Santoso shrugged off
worries that Heidelberger would force the company to prioritize
Heidelberger's export demands.

"If the price in the local market is better than outside, then
of course we can sell it (the cement) here," Benny told reporters
following Indocement's extraordinary shareholders' meeting.

Heidelberger, through its subsidiary, Kimmeridge Enterprise
Pte Ltd, owns a 61.7 percent stake in Indocement.

The German company acquired the stake partly under a
complicated rights issue plan in exchange for absorbing US$150
million worth of Indocement's debt.

Heidelberger also took over Indocement's shares from the
latter's parent companies, the public and the government.

As part of the deal, Indocement is required to sell its cement
through Heidelberger's subsidiary HC Trading International, but
it may refuse to do so, should it find better prices elsewhere,
Benny said.

"We can sell our cement to a buyer that offers a better deal,
however, the administration process must go through
Heidelberger," he explained.

Observers fear that a controlling position on the part of a
foreign cement producer could drain out the local cement supply,
and drive prices up.

According to them, the foreign cement producers would seek to
control local cement prices to meet their global market needs.

Aside from Heidelberger, Mexican cement producer PT Cemex
Indonesia is trying to raise its stake in state-owned PT Semen
Gresik, while Swiss based Holderbank Financiere Glaris Ltd eyes a
controlling stake in PT Cement Cibinong.

Following an acquisition binge during the early nineties,
these three companies are now among the world's largest cement
producers.

Last year, Benny said, Indocement's exported only 2 million
tons of cement of its total sales of around 10 million tons.

"And this (the exports) is also the result of an oversupply.
If Indonesia's economy is fully recovered we will, of course,
want all of our cement to be sold in the domestic market," he
added.

Indocement has an annual cement production capacity of 15.8
million. Benny expected sales this year to grow to between 11
million and 12 million tons.

Heidelberger's distribution unit, he said, only helped
Indocement find export markets if the local market was saturated.

Benny refused to detail the transactions through which
Heidelberger obtained its stake in Indocement.

According to a company official, who refused to be named,
Heidelberger has spend more than $200 million buying up its 61.7
percent stake in Indocement.

Following transactions with Heidelberger, the government's
stake fell to 16.9 percent from 25 percent, and the public's
stake to 8 percent from 12.25 percent.

The combined stakes of Indocement's parent companies PT Mekar
Perkasa and PT Kaolin Indah Utama, fell to 13.4 percent from
69.25 percent.

Heidelberger's entrance is part of the Indocement debt
restructuring deal with local and foreign creditors.

The $150 million in Indocement debts Heidelberger took over,
has cut the former's debt to $900 million.

During the shareholders' meeting, Indocement appointed new
boards of commissioners and directors.

The shareholders approved, among other things, the appointment
of director general of state enterprises I Nyoman Tjager as
Indocement's' assistant chief commissioner.

Representing Heidelberger's interests is Indocement's new
chief commissioner, Paul Marie Vanfrachem, and president Daniel
E.A Lavalle.

They replaced Sudono Salim and Sudwikatmono respectively.
(bkm)