IBRA to sell Indosiar, seven other Salim firms

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) announced on Friday plans to sell eight companies formerly owned by the giant Salim Group, including the publicly listed television network PT Indosiar Visual Mandiri.

IBRA chairman I Putu Gede Ary Suta said he expected the biggest gain to come from the sale of Indosiar, as the agency steps up its effort to achieve a 2001 proceeds target of Rp 27 trillion (US$3.1 billion).

"The sales launch shows that no hesitation is made on the asset sales," Ary Suta told a media conference.

The Salim Group, previously the country's largest conglomerate, transferred ownership of some 100 companies to IBRA by way of repaying its debts to the government, which injected several billion dollars worth of emergency liquidity support into the group's Bank Central Asia (BCA) amid massive runs on the bank in the wake of the 1997 financial crisis.

Ary Suta said IBRA would sell up to 49 percent of its 57.26 percent stake in Indosiar.

The agency owns Indosiar through PT Holdiko Perkasa, a holding company that was set up to control assets of the Salim Group.

IBRA asset disposal head Dasa Sutantio said earlier that foreign and local investors were eagerly waiting in line to acquire a stake in Indosiar.

Should IBRA sell Indosiar to a foreign strategic partner, it will mark the first instance of foreign ownership in a local television network.

However, IBRA's expectations of a revenue boost from Indosiar's sale to foreign investors may face problems, as the current broadcasting law prevents foreign ownership in local television networks.

Legislators are working on amending the law, which they estimate to be completed by year's end.

Nevertheless, according to a draft of the amendment, foreign investors may only control a minority stake in publicly listed television networks.

Dasa said IBRA had no plans to seek an exemption from legislators to push ahead with the Indosiar sale.

"We will comply with the existing regulations," he said.

IBRA is targeting a preliminary bid for Indosiar by the end of September, a due diligence process to be completed by mid- October, and a final bidding round later in that month. A closing date for the sale has been set for early December.

The other seven Salim firms up for sale are Salim's Sugar Group, comprising two sugar plantation and manufacturing firms; steel drum producer PT Poli Contindo Nusa; industrial estate and shipyard operations PT Herwido Rintis and PT Bintan Inti Industrial Estate; health drink producer PT Yakult Indonesia Persada; packaging producer PT Salim Rengo Containers; semi- refined carrageenan producer PT Gumindo Perkasa Industri; and China-based float glass company PT Guangdong Jiangmen ISN Float Glass.

Ary Suta declined to say how much he expected from the sale of the eight firms, but had earlier told The Jakarta Post that proceeds reach Rp 3 trillion.

IBRA is under pressure to raise cash to help cap a gaping state budget deficit.

Poor market conditions in the first semester resulted in the agency only realizing Rp 11.25 trillion in revenues, forcing it to pursue the bulk of the target throughout the second half of the year.

The launching of the Salim asset sale has arrived amid strong criticism that IBRA has been too slow processing assets sales and debt restructuring.

The criticism been provoked, in part, by the drawn-out sale of a 30 percent stake in the publicly listed BCA.

Dasa said IBRA may not be able to divest its BCA shares on schedule in order for proceeds to be transferred this year, as targeted.

He said that his Asset Management Investment unit may have to offset the shortfall in revenue due to delays in the BCA sale.

Ary Suta also said that he had canceled services supplied to IBRA by state consultant firms PT Bahana Securities, PT Danareksa Securities and the Indonesian unit of Lehman Brothers Inc..

He said the three firms had been IBRA's consultant coordinators, a position he said was inefficient and costly. (bkm/tnt)