Indosat to raise $200m through rights issue

Indosat to raise $200m through rights issue

JAKARTA (JP): International telecommunications operator PT
Indosat expects to raise some US$200 million through a rights
issue early next year to finance its expansion plans, according
to State Minister for the Empowerment of State Enterprises Tanri
Abeng.

Tanri said on Friday that the rights issue would be part of
the government's two-stage privatization plan for the company in
the current fiscal year.

"Indosat needs some $200 million to finance infrastructure
development and acquisition plans," he told reporters after
launching the country's blueprint for restructuring state-owned
companies.

Indosat, which is 65 percent owned by the government, is
listed both on the Jakarta Stock Exchange and New York Stock
Exchange.

The rights issue plan was approved by shareholders at an
extraordinary meeting here last week

Tanri said that the proceeds from the sales of 54.5 million in
the rights issue would be entirely used to finance Indosat's
expansion plans.

He said that money which would go into the government coffers
would come from the second part of the privatization step via a
further divestment in the company.

Tanri said the government planned only to reduce its stake to
51 percent in order to retain a majority shareholder status.

Asked about the possibility of a further divestment to below
51 percent, he said: "We will not make any commitment right now,
but if such a move is profitable we'll consider it."

Indosat is one of the seven state-owned companies listed in
the government's privatization program for the fiscal year ending
in March 1999 in a bid to raise $1 billion to help finance the
state budget deficit.

The government earlier planned to privatize 12 state-owned
companies to raise $1.5 billion but backed off, citing an
unfavorable market condition.

Speaking to journalists following the launching of the
government's master plan on privatization and corporate
restructuring program, Tanri said that the $1 billion target was
still attainable although there were still six state companies to
be sold to strategic investors with only three months left before
the fiscal year ends.

"We have already started the bidding process and the responses
have been positive. We expect to have final bids before the end
of the fiscal year," he said.

"The only problem is the security condition here," he added,
pointing out that several countries had forbidden their citizens
to travel to Jakarta amid massive riots in the capital.

Tanri said that he had to send his senior staff overseas to
meet the potential foreign strategic investors to complete due
diligence process.

The government recently raised $114 million from the 14
percent sale of the publicly-listed cement maker PT Semen Gresik
to Mexico's cement giant Cemex SA de CV.

The other state-owned companies currently in the selling
process are Indosat, port operators PT Pelindo II and PT Pelindo
III, plantation company PT Perkebunan IV, airport operator PT
Angkasa Pura II, and the publicly-listed mining company PT Aneka
Tambang.

Tanri said that the postponed privatization process for the
other five state companies would be carried out in the next
fiscal year.

Tanri said that restructuring state-owned companies is part of
the government's major economic reform programs.

The government launched on Friday the 118-pages restructuring
master plan book outlining restructuring and privatization
objectives, methods, and implementation agenda.

Tanri said that the blueprint for the restructuring of 150
state-owned companies was essential to boost the performance of
the state companies which were generally disappointing even prior
to the economic crisis with the average return on capital
employed of 3 percent, compared to 15-20 percent provided by the
private sector. (rei)