Indofood makes ready Rp 920b to buy back shares

Indofood makes ready Rp 920b to buy back shares

JAKARTA (JP): Shareholders of publicly listed giant food
producer PT Indofood Sukses Makmur approved on Wednesday the
company's plan to buy-back up to 10 percent of its issued shares
in nearly two years.

Indofood president Eva Riyanti Hutapea said the company would
allocate about Rp 920 billion (about US$80.7 million) to finance
the buy-back plan

She said that the buy-back would be carried out when the
company's share prices were under pressure so that the share
price would continue to reflect the real value of the company.

"At times when share prices are low, we will purchase them,"
Eva told reporters after Indofood's annual shareholders' meeting.
However, she added, Indofood was under no obligation to purchase
its shares if it lacked funding.

She said the approved buy-back plan was valid for 18 months
only, starting from June 1, 2001 until November 30, 2002.

"If an opportunity for future acquisition and business
expansion arises, it's possible the company will sell these
shares through the bourse," she explained in a statement.

Indofood, she said, could also gain revenue by later reselling
the shares at higher prices.

Eva played down critics of the buy-back plan, which some say
was difficult given the company's funding needs to service debt
payments this year, and to finance an acquisition plan.

Amid the steady weakening of the rupiah, the company has $450
million in debts, which will mature this year, and an acquisition
deal worth $173 million.

But Eva countered the critics, saying that of the $450 million
in debts, $340 million have been hedged.

She said that in July, Indofood planned to repay $125 million
of its debts, including all the debts that had not been hedged.

"After that (the payment) our foreign exchange exposure will
be almost none, or at least sharply reduced," she went on.

Eva said that Indofood's export revenues, which last year
stood at $210 million, assured an adequate foreign exchange
supply stream.

Indofood recently entered into a $173 million worth
acquisition agreement to purchase shares of the Singapore listed
Golden Agri Resources, a unit of the Sinar Mas Group's Asia Food
Property (AFP).

Under the deal, Indofood's wholly owned subsidiary Witty East
Holdings Limited, will initially acquire a 30 percent stake in
Golden Agri for $97.6 million.

Later, Witty East may raise its stake to between 50 percent
and 55 percent through an open market tender offer.

Indofood expects the acquisition will boost its yearly crude
palm oil output from 300,000 metric tons to an estimated 1.3
million tons.

Eva had earlier said that purchasing Golden Agri could double
Indofood's export revenues.

Aside from its huge CPO output, Golden Agri is also the
producer of a number of branded palm oil products, including the
cooking oil Filma.

She said Indofood plans to finance the acquisition through a
combination of debts and own funding. However, she refused to
reveal details of the financing scheme.

On the downside of the deal, Golden Agri carries debts of $400
million, and failed to report profit during last year's
operation.

Eva declined to comment on Golden Agri's performance, saying
she awaited the results of a due diligence on the company.

She also dismissed worries that the purchase of Golden Agri
would violate antimonopoly laws in the palm oil industry.

"I have said before that I want to bring its (Golden Agri)
products, the CPO, the derivatives and its branded products, to
the international market," she said.

Indofood's shareholders further approved the dividend
payments, after the company deferred payments in the last three
years.

For this year, the company plans to pay dividends of Rp 18 a
share from its profit last year.

Shareholders also approved the issuance of new shares to be
owned by Indofood's employees.

Under this move, employees would own a total of 4.8 percent of
Indofood's stocks.

The public's stake would drop to 49.5 percent from 52 percent,
while shares of Indofood's parent company CAB Holdings Limited
would drop to 45.7 percent from 48 percent.(bkm)