IBRA to sell more of its ownership in Salim Group

IBRA to sell more of its ownership in Salim Group

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
plans to sell its ownership in more than seven companies this
year, mostly those of the Salim Group companies, according to a
senior official at the agency.

Director of IBRA's asset management investment (AMI) Dasa
Sutantio said on Thursday the divestment would take place in the
second semester.

"We'll complete the preparation in the first semester," he
told the press at the agency's headquarters.

Dasa said the companies to be sold this year included the
Salim Group's cement maker PT Indocement, retail operation PT
Indomarco, condensed milk manufacturer PT Indomilk, car maker PT
Indomobil, and coal mining firm PT Indo Coal, and Bob Hasan's
paper company PT Kiani Kertas and Sjamsul Nursalim's tire maker
PT Gadjah Tunggal.

The Salim Group, and businessmen Bob Hasan and Sjamsul
Nursalim surrendered their ownership in various companies to
IBRA, a unit of the finance ministry, to repay the debt of their
formerly owned banks to the government.

Indomarco was initially planned to be sold last year.

IBRA had also said earlier that it would sell Salim's TV
broadcasting company PT Indosiar through an initial public
offering this year.

IBRA is targeted to raise some Rp 27 trillion (US$2.84
billion) in cash this year in a bid to help plug the deficit in
the current state budget estimated at 3.7 percent of the gross
domestic product.

IBRA's AMI division must contribute around Rp 8.5 trillion to
the Rp 27 trillion target. Another Rp 8.92 trillion is expected
to come from the sale of restructured nonperforming loans (NPLs)
under the agency's management, Rp 2.23 trillion from the cash
recovery of NPLs, Rp 2 trillion from the sale of noncore assets,
and Rp 3.6 trillion from the divestment of the government's
ownership in banks.

IBRA has nearly 100 percent ownership in four nationalized
banks including the publicly listed Bank Central Asia (BCA),
Bank Niaga, Bank Danamon and Bank Bali, and between 50 percent
and 80 percent ownership in seven other recapitalized banks,
including the publicly listed Bank Internasional Indonesia, Lippo
Bank, Bank Universal, and nonlisted Bank Bukopin, Bank Patriot,
Bank Artha Media, and Bank Prima Express.

IBRA deputy chairman for bank restructuring Jerry Ng said
separately on Thursday that the agency planned to divest the
majority of the government's ownership in BCA and Bank Niaga in
the first semester of this year in a bid to raise the Rp 3.6
trillion target of the bank restructuring unit.

Jerry declined to mention the size of the planned divestment
in the two banks, but he pointed out that according to the
government's letter of intent to the International Monetary Fund,
the government must divest their majority ownership in the two
banks.

"So we can define it as selling at least a 51 percent stake so
that the government would no longer be the single majority
shareholder," he said.

"But if the market conditions are good, we can always sell
more shares," he added.

Jerry declined to provide further details on the BCA and Bank
Niaga sale plan.

The government initially owned a 93 percent stake in BCA after
it took over the bank from the Salim Group in May 1998. IBRA sold
22.5 percent of the government's stake in BCA in June last year
through an initial public offering.

The government controls around 97 percent interest in Bank
Niaga.

The government was supposed to sell its ownership in BCA, and
Bank Niaga, sometime at the end of last year, but it was
postponed due to poor market conditions at the time.

The IMF, which is providing a multibillion dollar bailout fund
for the country, was deeply disappointed by the delay.

Elsewhere, Jerry said the condition of the 11 banks under IBRA
is "generally improving," but the rising trend in domestic
interest rates is an important factor that must be carefully
observed because it can affect the banks' condition. (rei)