Matahari raises stake in Hero Supermarket to 10%

JAKARTA (JP): The country's largest retailer PT Matahari Putra Prima announced yesterday that it had bought another five percent of Hero Supermarket, raising its stake in the supermarket chain to 10 percent.

Matahari said it bought the five percent stake in Hero, comprising of 11.75 million shares, through the stock exchange. It was its second purchase in the supermarket made within the last two weeks.

Matahari, which is partly owned by Multipolar Corporation, the operator of the Indonesian branches of Wal-Mart, JC Penny and several other foreign retail chains, bought the first five percent of Hero early last week.

"We are very serious and committed to the supermarket business and to increase our market share in this line of business," Matahari's president Hengky Tjitra said in a statement yesterday.

"As I have said before, I do not rule out any further investment in Hero," he said.

The statement said that with the additional 11.75 million shares acquired yesterday, Matahari's stake in Hero increased to 10.01 percent or 23.52 million shares.

"The additional shares confirmed our desire to become a long- term investor in the company," Tjitra said.

Tjitra said the purchase of Hero shares would create a new synergy in Matahari's retail operation and distribution.

He, however, did not mention the total amount of funds spent to buy the 23.52 million shares and where the company got the funds for the purchase.

Matahari Putra Prima reported earlier that it had received Rp 470 billion (about US$138 million) from Multipolar Corporation, its largest shareholder, as the payment for the portion of its rights shares.

Matahari, the country's publicly-listed department store chain, said that the payment was made "with cash on hand with no bank loans".

Matahari is currently offering a two-to-one rights issue to raise around Rp 902 billion in fresh funds to finance its expansion.

After the rights issue, Matahari expects to book Rp 1.5 trillion in equity.

Matahari, which claims to be Indonesia's largest retail group, operates 81 retail outlets throughout the country, with more than 2,700 local suppliers.

Matahari stock price on Jakarta Stock Exchange lost Rp 25 to close at Rp 575 while the price of the Hero stock rose by Rp 100 to close at Rp 1,600. (aly)