Indofood bypasses paying dividens for 1999

Indofood bypasses paying dividens for 1999

JAKARTA (JP): Publicly listed PT Indofood Sukses Makmur said
on Thursday it would not pay any dividend for 1999 financial year
as most of the Rp 1.4 trillion net profit made during the year
would be retained to help pay its debts.

"We didn't pay out any dividends this year because Indofood
needs to repay debts," Indofood president Eva Riyanti Hutapea
said after the company's annual shareholders meeting.

She said that the company had about Rp 2.8 trillion in cash to
finance part of its debts.

As March 31, 2000, Indofood had a total short-term debt of Rp
5.07 trillion and total long-term debts of Rp 2.71 trillion.

Eva said that the company's debts which mature in July would
be about Rp 630 billion in local currency and $270 million in
foreign currencies.

As reported earlier Indofood will issue five-year bonds worth
Rp 1 trillion in July.

The bonds, bearing a quarterly fixed yield of 16 percent per
annum, will be offered to investors between July 3 and July 5.
The listing date is on July 24 on the Surabaya Stock Exchange.

The proceeds of the bonds will be used to build a palm oil
processing plant, expand its packaging factories and improve its
distribution system for more efficiency, according to Eva.

Previously, Indofood planned to use about a quarter of the
above bond proceeds to acquire a majority interest in a noodle
plant based in Saudi Arabia.

However, Indofood later had to postpone the plan as the
capital market watch dog (Bapepam) indicated that the purchase
might put the company into breaching the regulation on internal
acquisition, as the noodle plant to be acquired is affiliated
with Indofood founding shareholder, Salim Group.

Eva said Bapepam is currently studying Indofood's planned
acquisition as to whether it contains a conflict of interest and
could harm public investors.

Some analysts have alleged the company's overseas expansion
was part of a strategy to circumvent the country's newly
introduced anti-monopoly law.

Indofood, which controls over 80 percent of the country's
noodle market, had no choice but to boost its noodle operation
overseas to avoid the new law, the analysts said.

According to the 1999 Anti-Monopoly and Unfair Competition
Law, a single business entity could possibly be categorized as
committing an act of monopoly if it controls a 50 percent or
above of the market share of a certain product.

By supplying the Indonesian market through its overseas
operation, the company could escape the anti monopoly law, they
said.

Eva dismissed such allegations, claiming that Indofood had not
breached the country's monopoly laws because the company never
committed an act of unfair competition during the course of its
business operations.

"It is not right that one can be accused of carrying out a
monopolistic practice only because it has a huge market share,"
Eva said.

Having a dominant market share would not automatically
constitute a monopoly, she added.(udi)