Indonesia seeks higher price for Semen Gresik shares
Berni K Moestafa, The Jakarta Post, Jakarta
The government announced on Tuesday that it would negotiate a higher price for the sale of giant cement company PT Semen Gresik under a put option agreement with Mexican-based Cemex SA de CV.
State Minister for State Enterprises Development, Laksamana Sukardi said that although Cemex agreed to a premium price for Semen Gresik's shares, the government considered the company to be worth higher than the price Cemex had offered.
"They (Cemex) are willing to spend twice the market share price, however we will try to negotiate for an even higher price," Laksamana told reporters on the sidelines of a seminar on privatization held by business information specialist, CastleAsia and InterMatrix Communications.
The government, he said, would seek to match Semen Gresik's acquisition value with those in the Philippines.
According to him, Cemex had acquired Semen Gresik at an enterprise value of US$68 per ton. While similar acquisitions of cement companies in the Philippines had been valued at between $80 and $100 per ton, he said.
Semen Gresik boasts an annual output capacity of 19.25 million metric tons. Its two units, PT Semen Padang and PT Semen Tonasa, contribute a capacity of 5.57 million and 3.48 million tons respectively.
In 1998, Cemex entered Semen Gresik with an 11 percent stake, which it later increased to 25.53 percent.
The Mexican company agreed to the purchase, based on the government's promise to sell a majority stake later on under a put option deal.
With the deal, the government has the right to sell Semen Gresik at $520 million, which Cemex must accept. The deal will expire on Oct. 26.
Laksamana said Cemex had agreed to the government's request to extend the put option deadline.
He did not say how long the delay would be, but said the government hoped to exercise its put option right this year.
PT Cemex's Indonesia president, Francisco Noriega, however, declined to confirm the extension, saying Cemex and the government had yet to meet for talks.
Exercising the put option right would give the government a much needed revenue boost to achieve this year's privatization targets.
As of now, the realization of that target amounts to zero.
The government has been under strong pressure to resist the put option deal, from regions banning foreign control in Semen Gresik.
Locals at Semen Padang and Semen Tonasa are demanding the government spin off the two units from Semen Gresik, before selling to Cemex.
A spin-off, however, would undermine Semen Gresik's value and thus annul Cemex's put option deal.
"With the global economic situation like it is, this (put option deal) is a golden opportunity," Laksamana said.
But he added the government must heed the regions' protests and seek a "win-win solution" with all parties.
According to him, a spin-off does not necessarily mean the break-up of Semen Gresik. Instead, it would require the restructuring of the company's organization.
"We're doing a study on how to include equal treatment and to accommodate regional aspirations," he said.