Inti Indorayon's acquisition plan approved

JAKARTA (JP): Shareholders have approved PT Inti Indorayon Utama's plan to acquire the Kerinci Chemical Assets of PT Riau Andalan Pulp & Paper (RAPP) for US$141.56 million.

During the extraordinary meeting in Medan Thursday, they also approved the appointment of Sukanto Tanoto as the Indorayon chief commissioner. He replaces his late brother, Polar Yanto Tanoto, who died in a plane crash near Medan last September.

Corporate secretary P. Daritan said following the meeting that shareholders also gave the go-ahead for concluding agreements on sales of chemicals to PT RAPP, and energy purchases with PT Riau Prima Energi (RPE).

He said the U.S. dollar would be used in all transactions.

The acquisition plan is part of a company strategy for developing the chemicals division as the third core business along with pulp and viscose rayon fiber, according to Daritan.

He said the move would add an estimated $28 million to Indorayon's projected net income for 1998. The company is listed on the Jakarta and Surabaya stock exchanges.

"In the future, the added profit contribution should increase, as plant capacity utilization improves as a consequence of Riaupulp planned increase in pulp production," he said.

Indorayon's strategy, he added, was to benefit from the growing demand for chemicals for internal requirements in the Raja Garuda Mas Group, and for domestic and other Asian markets.

Indorayon specifically plans to supply chemical requirements for the Asia Pacific Resources International Holding Ltd. (APRIL) Group, he said.

"Indorayon has also planned to produce other chemicals, such as paper chemicals needed by APRIL Group, which will start to produce papers by 1998," he added. "Paper production of APRIL Group is expected to increase from 200,000 tons in 1998 to 600,000 tons annually by 2001."

Daritan said the acquisition would also allow for development of the trading of chemicals, through selling of excessive production and that exceeding the requirements of APRIL.

"Part of the Indorayon strategy in this acquisition is also to focus itself long-term in chemicals," he said. "This is mainly those with higher added value, with big potential in the Indonesian market and surrounding regions." (hen)