Indocement to launch rights issue

JAKARTA (JP): Publicly listed cementmaker PT Indocement Tunggal Prakarsa will launch a rights issue to strengthen its capital structure.

Indocement corporate secretary Ria Sjahroni Sereh said the rights issue would also be part of the cement producers's debt restructuring program.

"We expect to hold the rights issue before the end of this year," she said, without giving further details on the plan.

She added that the rights offer would come before Indocement completed the sale of the company's shares to foreign strategic partners.

Ria said the company, the country's second largest cement producer, was looking for strategic investors in order to improve its performance.

"Two foreign cementmakers have made due diligence on the company since July," she said after the company's extraordinary shareholders meeting.

The strategic investors are French La Farge SA and German Heidelberger Zement, she added.

Ria said that Indocement had long sought a strategic alliance with international cement companies since last year in its effort to improve its global marketing network.

"Forming a strategic alliance with global players will certainly enhance our international marketing network," she said, pointing out that France's La Farge and Germany's Heidelberger had recognized the company's professional management.

Ria also said the company was in the final stages of its debt restructuring process and expected to reach an agreed with lenders soon.

The company's short-term debts amounted to Rp 8.08 trillion as of June 30, an increase from Rp 1.82 trillion last year.

Indocement is one of the companies surrendered by the widely diversified Salim Group to the Indonesian Banking Restructuring Agency (IBRA) as payment for liquidity support extended to the group's Bank Central Asia.

Ria said IBRA was currently holding about 20 percent of Indocement's shares.

She said Indocement was currently 38.7 percent owned by the Salim Group through PT Mekar Perkasa, 25.73 percent by the government, 20 percent by IBRA and the remainder by the public.

Ria said Mekar Perkasa's stake in Indocement had been reduced to 38.7 percent from 55.08 percent following the taken over of part of Mekar Perkasa shares by IBRA.

Indocement is the country's second largest cement producer and has 38 percent of the country's cement market.

Last week, Indocement announced a consolidated net income of Rp 558.47 billion (about US$74.5 million) in the first semester ending on June 30, up from Rp 3.32 billion in the same period last year, bolstered by a hefty foreign exchange gain of Rp 361.65 billion during the January-June period.

Indocement's income from operations dropped 14.92 percent in the first six months to Rp 192.59 billion compared to Rp 226.36 billion during the same period in 1998.

The company said cement and clinker overall sales volume declined 7.88 percent to 3.34 million metric tons as a result of lower domestic demand. Exports rose 61.04 percent to 926,000 tons, about 27.72 percent of total sales during the six-month period.

Ria said that exports would become Indocement's mainstay to gain revenue.

"We will raise our exports in the second half of this year and next year. But the portion of domestic sales will be still bigger than the products exported," she said.

Ria also said the shareholders meeting on Tuesday decided to retain tycoons Sudwikatmono and Soedono Salim as the company's president and chief commissioner respectively for the 1999/2004 period.

Sudwikatmono is former president Soeharto's cousin, while Sudono Salim is one of Soeharto's close friends.

The shareholders meeting also decided to appoint I Ketut Mardjana, the director of manufactured industries at the Office of the State Minister of the Empowerment of State Enterprises, as a commissioner, replacing Aang Kunaefi, who has retired. (gis)