Holderbank to increase equity in Semen Cibinong
JAKARTA (JP): The world's largest cement producer Holderbank Financiere Glaris Ltd expects to boost its ownership in publicly listed cement producer PT Semen Cibinong to 60 percent from its current 12.5 percent.
Semen Cibinong's president Hashim Djojohadikusumo said on Monday that Holderbank would inject fresh funds of about US$150 million as part of its concession to increase its ownership in the cement company.
"Holderbank is committed to enter Semen Cibinong... we badly need their funds," Hashim said in a press meeting following the company's extraordinary shareholders' meeting.
He said the entrance of Holderbank would help in the restructuring of Semen Cibinong's foreign debts of $1.15 billion and local debts worth Rp 330 billion ($37 million).
Hashim said Holderbank had proposed a debt restructuring scheme for Semen Cibinong which would result in an increase of its ownership to 60 percent in the company. The creditors would own 25 percent and the investing public the remaining 15 percent as part of the debt-to-equity swap deal, he added.
However, the debt-to-equity swap had yet to be approved by the creditors, he added.
Hashim declined to elaborate on the proposed debt restructuring scheme, saying it was highly complicated.
"There are many creditors with their own different interests," he explained.
The company's foreign creditors includes Japan's Itochy Corporation with loans worth about $150 million, the United States' Export Import Bank with credits of $110 million and a syndicate of banks and financial institutions with credits worth $175 million.
According to Hashim, a crucial part of the negotiation was determining Semen Cibinong's share prices for the debt-to-equity swap.
He said the company would issue new shares to accommodate the entrance of its creditors and Holderbank.
Semen Cibinong, he went on, would probably fail in meeting its target of completing the debt restructuring by Dec 31, this year.
However, he expressed optimism that the company would finalize a deal in the second quarter of next year.
"Once the restructuring is completed, the company (Semen Cibinong) will become a subsidiary of Holderbank and will be consolidated with Holderbank," Hashim explained.
He added that Semen Cibinong would remain listed at the Jakarta Stock Exchange.
The Swiss-based Holderbank is listed in Zurich and owns 70 cement operations worldwide, he said.
Foreign cement producers are eying local cement firms to help strengthen their global market share.
PT Indocement Tunggal Prakasa is also set to merge with the German-based Heidelberger Zement A.G. which plans to inject $150 million into the company under a debt-to-equity swap.
Semen Cibinong conducted the shareholders' meeting under the order of the Capital Market Supervisory Agency (Bappepam).
Bappepam required the company to explain to its shareholders the whereabouts of the alleged missing $250 million in deposits.
The agency demanded the explanation following the uproar over the reported missing funds from Semen Cibinong's 1998 financial statement.
Hashim said the company had placed the funds in two foreign banks, Bank Central Pacific in Vanuatu and the Far East Bank in the Cook Islands.
According to him, the two banks ran into financial problems and the company had now difficulty withdrawing its funds.
Hashim said he was considering taking legal action against the two banks.
In 1999 Semen Cibinong booked a net profit of Rp 15 billion compared to Rp 1.8 trillion in losses during the previous year.
Its sales rose 27 percent to 5.2 million metric tons of cement due to higher export sales in 1999.
The company's export markets includes the United States, Australia, Bangladesh, Egypt, Nigeria, Singapore, Sri Lanka and United Arab Emirates.
Hashim said last year's domestic cement sales dropped by seven percent because of the sluggish construction industry.
Next year, he said, the company expected sales of 5.8 million tons of cement.(bkm)