Hexindo to sell stake in joint venture firm

JAKARTA (JP): Publicly listed heavy equipment supplier PT Hexindo Adiperkasa will sell its 12.5 percent stake in PT Hitachi Construction Machinery Indonesia (HCMI), a Hexindo executive said here on Tuesday.

President director Rustam Effendi said the stake would be sold for US$1.62 million to Hitachi Construction Machinery Pte., Ltd., Singapore (HCMS).

"All the funds raised from the divestment will be used to increase the company's working capital and strengthen its liquidity," he said after the company's shareholders meeting.

Shareholders at the meeting approved the plan to sell the stake. Not on the agenda at the meeting, however, was the issue of dividend payments for last year.

The company said selling its stake in HCMI would not change the status of Hexindo as the exclusive distributor for HCMI.

Hexindo's business covers the sale and rental of heavy equipment and spare parts to companies, including mining and plantation firms.

Hexindo's sales reached Rp 467 billion in 1998, a 104 percent increase over the Rp 229 billion the company booked in 1997.

The sale of heavy equipment accounted for the majority of the company's sales in 1998, reaching Rp 230 billion, a 60.5 percent increase over the Rp 143 billion recorded the previous year.

However, the company suffered a net loss of Rp 131.15 billion last year, compared to a Rp 29.71 billion net loss in 1997. This was partly due to an increase in foreign exchange losses, which increased to Rp 223.81 billion in 1998 from Rp 31.60 billion the previous year.

Effendi said he was upbeat the company would book a net profit of some Rp 52 billion this year.

"We believe the company can reach this target in light of its bullish performance over the past four months, which saw a total net income of Rp 35 billion," he said.

He said the company recently secured a loan commitment from the Japanese Export Import Bank worth two billion Japanese yen to refinance its existing loans.

"Most of the funds will be used to restructure our debt to overseas banks, including banks in Japan," he said.

Hitachi Construction Machinery Co., Ltd., Japan, holds a 40.02 percent stake in Hexindo, while PT Hexindo Adiperwira has a 24.32 percent stake in the company and Itochu Corporation Japan has a 22.55 percent stake. The remaining shares are held by Hitachi Construction Machinery Pte., Ltd., Singapore (5.97 percent), GSIC 'C' (1.57 percent), South Hills Funding (1.41 percent), cooperatives (0.18 percent) and the public (4.88 percent).(cst)