Kiani Lestari defends delay in share offering

Kiani Lestari defends delay in share offering

BALIKPAPAN, East Kalimantan (JP): Timber mogul Muhammad Hasan
has denied that the delay in the planned initial public offering
of shares in his integrated wood-based firm, PT Kiani Lestari,
reflects investor wariness, saying that the company is simply not
in need of additional funds.

"Conducting an initial public offering is only necessary when
a company needs funds, such as for expansion," he said here on
Monday during a tour of the planting grounds and plywood mill of
PT International Timber Corp. Indonesia.

Hasan, accompanied by the forestry ministry's Director General
of Forest Utilization Titus Sarijanto, led the group, which
included visiting U.S. Congressmen Bill Archer and E. Clay Shaw,
Congresswoman Nancy Johnson and Chief of the staff of the U.S.
Joint Committee on Taxation Kenneth Kies.

Kiani Lestari's plan to go public was announced last December,
when the Ministry of Forestry said that the Geneva-based Societe
Generale de Surveillance (SGS) had finished assessing three
timber companies -- PT Artika Optima Inti, PT Surya Dumai Group
and Kiani Lestari -- which planned to sell part of their shares
to the public.

The services of SGS are used by the Ministry of Forestry to
conduct assessments to ensure the sustainability of forest
concessions and the future viability of the forestry business in
particular areas.

So far, however, only Artika has conducted a public
presentation on its listing plan, while results of the assessment
of the other two companies have not been announced.

SGS executives were not available for comment yesterday.

Some analysts have claimed that Kiani Lestari's failure to go
ahead with the initial public offering is due to investor
skepticism. It has been said that investors are concerned over a
possible conflict of interest on the part of Hasan, who is both a
major industry player and the chairman of the Association of
Indonesian Wood Panel Producers.

The association and its policies -- which allow only selected
distributors to market their products -- for the recent downturn
in the plywood export industry.

Kiani Lestari, which is owned by Hasan, is part of the
Kalimanis Group, which was estimated to have total assets of more
than Rp 1 trillion (US$450 billion) as of the end of last year.

Business revenues from the group's subsidiaries increased from
Rp 825 billion in 1992 to Rp 975 billion in 1993.

Kiani Lestari has a 60 percent stake in PT Kiani Hutani
Lestari, a company currently developing a timber estate which is
expected to supply timber for wood-working industries. The
remaining 40 percent stake is owned by state-owned PT Inhutani I.
(pwn)