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)