JSX suspends trading of Indorayon

JSX suspends trading of Indorayon

JAKARTA (JP): The Jakarta Stock Exchange suspended on Monday
trading of shares of rayon and pulp producer PT Inti Indorayon
Utama as bewilderment greeted President B.J. Habibie's order to
halt the company's operations.

The bourse's trading division announced the move was made to
prevent price fluctuations in the stock due to unclear
information about the closure of Indorayon's facility in North
Sumatra.

"Trading on Indorayon has been suspended since 9:30 a.m.,
March 22, 1999, until further clarification," it said.

"The Jakarta Stock Exchange is seeking further information
from the company."

Indorayon was last traded at Rp 200 (2 U.S. cents) a share.

Habibie ordered on Friday the suspension of the operation of
Indorayon's plant near Lake Toba, North Sumatra, in an attempt to
calm tension with locals and allow an evaluation team to conduct
an assessment of its environmental and social impact.

North Sumatra Governor T. Rizal Nurdin said the President also
ordered a private foundation and an independent audit team
comprising environmental and health experts to evaluate the
impact of Indorayon's operations on the local environment.

The team is expected to issue a recommendation before Habibie
makes his decision.

Word in Jakarta, however, is that Indorayon has not received
official notification of the suspension.

Analysts said a closure order on Indorayon's mill could
backfire on Indonesia's efforts to sort out its economic
problems.

"The issue has dragged on for too long without any clear
conclusion. We've heard this since the middle of last year," said
David Chang, head of research at PT Trimegah Securindolestari.

"It's bad for Indonesia's reputation. The government does not
need to close a factory just to have an audit report."

He explained that many Indonesian firms, including Indorayon,
were hard-pressed to repay overseas debt, and that closing down
their operations would only make things worse.

Indorayon's finance director David Pile was reported earlier
to have said the company might default on the interest and
principal payments of its US$150 million in Eurobonds due in
2001.

Chang said many people dependent on Indorayon for jobs would
be hurt by its closure and uncertainty concerning its status.

"People are deeply puzzled about this," he said.

The pulp and rayon producer has been dogged by persistent
troubles since last July.

Its mills stopped operation in January last year because of
civil disorder and disruption of deliveries of materials and
supplies.

The company was asked by the provincial government to reopen
in November to allow an official audit of its environmental
impact.

The mills were closed again in January this year before the
audit was begun. (rei)