Marubeni denies deal to cut stake in Chandra Asri
Marubeni denies deal to cut stake in Chandra Asri
TOKYO (Dow Jones): Marubeni Corp., one of Japan's largest trading companies, Tuesday denied a report it has reached an agreement with the Indonesian government to restructure their financially troubled ethylene venture, PT Chandra Asri.
A report in the Tuesday morning edition of the Nihon Keizai Shimbun said Marubeni and the Indonesian government have agreed to restructure the venture by reducing its capital by up to US$700 million to sweep away a roughly US$650 million deficit accumulated from unprofitable operations.
Chandra Asri is a venture formed between Marubeni, Showa Denko KK and Toyo Engineering Corp. of Japan and several Indonesian partners, including the Bimantara and Barito groups. The Indonesian government took over the stakes of local investors after the currency crisis exacerbated losses at the debt-ridden project.
The Indonesian government, whose stake will reach some 70 percent after a debt-for-equity swap, also intends to sell a large part of its stake in the venture to BP Amoco PLC (BPA) of the U.K. after the capital reduction, for which the parties involved entered final negotiations, the newspaper reported.
The capital reduction will cut Marubeni's stake to below 20 percent from the current 21.2 percent, the daily reported, and leave Marubeni with a loss of about 20 billion yen, the newspaper said.
"We have not reached a basic agreement on this matter," a Marubeni spokesman said, denying the report. However, the trading company is currently in discussions with the Indonesian government to reorganize the venture, he added.
BP Amoco is "one candidate" for investing in Chandra Asri, "but that is a matter that will come later," the spokesman said. The spokesman declined to identify what losses Marubeni would suffer in a revamping of the venture.
Chandra Asri operates a plant that produces 520,000 metric tons of ethylene a year. The roughly US$1.9 billion venture is one of the largest Indonesian projects backed with Japanese investment.
It has been under the supervision of the Indonesian Bank Restructuring Agency after defaulting on debts to several private and state banks. Chandra Asri's Japanese creditor banks last year agreed to restructure its debts, suspending repayment of US$180 million of loans until August 2001.
BP Amoco
Meanwhile, BP Amoco PLC of the U.K. said in Jakarta on Tuesday it was seeking to buy a significant stake in financially troubled Indonesian ethylene venture, PT Chandra Asri, from IBRA, after the company's debt is restructured.
Rob Kelly, business development manager at BP Amoco Chemicals Indonesia, said the British company will seek to merge Chandra Asri with its local polyethylene plant PT Petrokimia Nusantara Interindo, known as PT PENI.
Kelly said, however, that he couldn't confirm whether IBRA has reached an agreement with Marubeni Corp., one of Japan's largest trading companies, to restructure Chandra Asri's debt.
"We're in negotiations (with IBRA) to merge PT PENI and Chandra Asri and are looking to come out of that with 50 percent of the merged company," Kelly said. "No progress is possible on this though, until the Chandra Asri restructuring is complete."
Located in Cilegon in West Java, Chandra Asri produces ethylene, polyethylene and propylene, the base materials for plastics.
According to Kelly, the Indonesian government would seek to hold onto some of Chandra Asri after a sale to a foreign investor.
A sale of a substantial equity stake in Chandra Asri would mark a major breakthrough for IBRA as it struggles to sell assets to generate funds for the state budget.