Indomobil exercises Nissan share option, allocates $8.3 million

The Jakarta Post, Jakarta

PT Indomobil Sukses International, the country's third largest automobile distributor, will exercise its option to buy back shares in PT Nissan Motor Indonesia (NMI).

Indomobil's shareholders agreed in an extraordinary meeting on Friday to authorize the company to spend US$8.3 million to acquire an additional 8.3 percent stake in NMI.

"This buyback will help increase Indomobil's earnings as sales of Nissan cars will continue to increase," said president director Gunadi Sindhuwinata after the meeting.

He added that sales of cars made by Nissan, which is one of 12 brands marketed by Indomobil, accounted for 12.5 percent of the company's roughly 96,000 vehicles sold last year. Sales of Suzuki vehicles accounted for 83 percent of the company's sales.

The share buyback, to be financed by the end of the year with a combination of retained earnings and loans, will reduce Japan- based Nissan Motor Corp.'s controlling share in NMI from 83.3 percent to 75 percent. Indomobil currently owns 3.04 percent of NMI, while its subsidiary, PT IMG Sejahtera Langgeng (IMGSL), owns another 11.66 percent.

After exercising its option, Indomobil's total ownership in NMI will reach 25 percent. Before 2001, Indomobil had a majority stake in the companies that distributed and assembled Nissan cars in Indonesia, while Nissan Motor Corp. had a 35 percent stake.

However, the majority stake was subsequently diluted to the present 14.7 percent, because Indomobil failed to come up with the necessary funds to maintain control, as a result of setbacks suffered during the 1997 monetary crisis.

In an agreement with Nissan Motor Corp., Indomobil retained the right to buy back some of its diluted shares at any point up to 2005. After the buyback, Indomobil will have no more options to purchase additional shares in NMI.

NMI is targeting a 23 percent growth in sales from 12,201 vehicles last year to 15,000 this year. In the first quarter of 2005, NMI sold 3,627 cars, a 50 percent increase from the same period last year.

To increase sales, NMI will expand its number of dealers throughout the country from 42 to 48 by the end of the year. NMI also plans to increase the production capacity of its West Java plant to support its goal of selling 40,000 cars per annum by 2008.

In its report, Indomobil said this year's first quarter net profit reached Rp 1.23 trillion (US$128.12 million) from last year's corresponding period of Rp 864 billion.

The company projected an increase in net profit to Rp 4.92 trillion this year from last year's Rp 4.29 trillion, which was a 59 percent increase from 2003's Rp 2.7 trillion. (002)