Marubeni to boost stake in Chandra Asri

Marubeni to boost stake in Chandra Asri

TOKYO (Reuters): Marubeni Corp said yesterday it may boost its stake in Indonesia's giant petrochemical project PT Chandra Asri, taking over shares held by its cash-strapped Indonesian project partners.

"There is a chance that Marubeni will take over part of the stake held by Indonesian partners, whose financial strength is likely to be sapped by the ongoing financial turmoil," a Marubeni spokesman told Reuters.

He also said Marubeni would never consider pulling out of the project despite the recent social and political turmoil in the world's fourth most populous country.

Earlier this month, the trading house said plans to raise Chandra Asri's ethylene output capacity had been postponed by one year due to a deteriorating financial situation on the side of Indonesian share holders.

The plant's annual ethylene production capacity was originally planned to be increased by 165,000 tons to 675,000 tons by the fourth quarter of this year.

The Chandra Asri project, Indonesia's sole olefin plant, is 23.8 percent owned by a Japanese consortium led by Marubeni, with the remaining 76.2 percent held by Indonesian companies.

Marubeni has a 89 percent stake in the Japanese consortium, while petrochemical manufacturer Showa Denko KK and Toyo Engineering Corp own seven and four percent, respectively.

Besides its investment in Chandra Asri totaling about 29 billion yen, Marubeni has guaranteed 57 billion yen worth of loans extended by Japanese banks to the project.

The Marubeni spokesman said the size of the stake Marubeni may take over was unclear at the moment, but that the Japanese consortium had no intention of becoming a majority share holder.

"We are not going over 50 percent. After all, Chandra Asri is like a national project for Indonesia," he said.

Other possible measures to shore up Chandra Asri's flagging operations include shifting business focus away from the sluggish Indonesian market to overseas markets, and adjusting the yields of petrochemical products made at the plant in a flexible manner, the spokesman said.

Chandra Asri currently exports about 60 percent of its petrochemical products, with the remaining 40 percent set aside for the domestic market.

Besides ethylene, the plant at Cilegon, about 120 kilometers from Jakarta on the southern coast of Java, is capable of producing 270,000 tons of propylene, 300,000 tons of polyethylene and 240,000 tons of thermal cracked gasoline per year.

Of the 76.2 percent stake held by Indonesian firms, the Barito Group has 29.4 percent, the Bimantara Group 22 percent, the Napan Group 9.8 percent, and the remaining 15 percent is held by a group of Indonesian banks, the spokesman said.