Holcim acquires $340m in Semen Cibinong debt

JAKARTA (JP): Swiss cement group Holcim Ltd. has purchased US$340 million in debt of publicly listed cement producer PT Semen Cibinong as part of the company's $1.18 billion debt restructuring deal, a company executive said on Friday.

Semen Cibinong financial director Bambang S. Atmadja said that Holcim would later convert the debt into Semen Cibinong equity, representing a 7.5 percent stake.

"For now, Holcim is a shareholder and a creditor of Semen Cibinong," Bambang said during the company's public presentation.

Under Semen Cibinong's debt restructuring deal, Holcim will gradually raise its stake in the company from the current 12.5 percent to about 74.5 percent.

Bambang fell short of saying when the debt acquisition took place, saying only that it occurred recently.

According to him, Holcim purchased the $340 million in debt in a series of transactions on the debt market.

But he could not say to which part of the three-stage debt restructuring scheme Holcim's purchase of the $340 million in debt belonged.

He only said that following the purchase, Holcim could later convert the debt into a 7.5 percent stake in Semen Cibinong, on top of the existing 12.5 percent it already owned.

A 7.5 percent share in the company for $340 million may appear small, but Bambang explained that the percentage took into account other creditors' shares of Semen Cibinong's total debt.

In the first stage of the debt restructuring scheme, Holcim will purchase Semen Cibinong's existing debts at a discounted rate, for which the company will set aside $175 million.

In the second stage, Semen Cibinong will convert the remainder of its debt principal into $500 million in new long-term debts.

Although the debt restructuring scheme has yet to be approved as part of a final deal with creditors, Holcim decided to go ahead with the purchase, said Semen Cibinong corporate secretary Jannus O. Hutapea.

According to him, some 99 percent of creditors supported the restructuring scheme.

He said he expected Semen Cibinong could ink a deal with the creditors by Aug. 31, this year.

The company recently secured its shareholders' approval for the restructuring scheme, but needs to seek their approval again once it strikes a deal with its creditors, Semen Cibinong president Hashim Djojohadikusumo said.

During the company's general annual shareholders' meeting, shareholders also agreed to write off uncollectable time deposits valued at $250 million.

Hashim stressed that the write-off plan was a prerequisite to the Holcim deal. The Swiss company wants a clean balance sheet before it enters Semen Cibinong, he explained.

Semen Cibinong placed the time deposits in two banks located in Vanuatu and the Cook Islands. Liquidity problems in the two banks prevented Semen Cibinong from withdrawing its time deposits.

Suspicion arose that $250 million in funds had gone missing, as information on the two banks was scare. As yet, the company has been unable to prove the existence of its deposits.

It has resisted calls to release the deposit certificates, arguing that creditors, with which it has been in negotiations, may take over the funds.

Asked whether Semen Cibinong could release the certificates now that creditors have agreed on restructuring the debts, Hashim said he would leave it up to the new management.

But he added that Semen Cibinong may take legal action against the two banks, despite the advice by Semen Cibinong's legal adviser not to take action. The legal adviser said it would be a waste of time, money and energy if the company took legal action against the banks.

A research director at SG Securities, Lin Che Wei, said Semen Cibinong appeared reluctant to disclose the whereabouts of the funds.

"He was just beating around the bush," Che Wei said. (bkm)