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)