Mexico's Cemex preferred bidder for Semen Gresik

Mexico's Cemex preferred bidder for Semen Gresik

JAKARTA (JP): The government has selected Mexico's Cemex SA de
CV as the preferred bidder to purchase part of the government's
65 percent stake in publicly listed cement producer PT Semen
Gresik.

A deputy to the state minister of the empowerment of state
enterprises, Sofyan A. Djalil, said yesterday that Cemex offered
to acquire 35 percent of Semen Gresik from the government for
US$287 million or $1.38 per share.

"Cemex is offering a 127 percent premium on Semen Gresik's
closing price on Wednesday and 226 percent higher than its
weighted average price for the last six month," he told the media
yesterday.

Semen Gresik's stock price stood at Rp 9,150 (63 U.S. cents)
when it was suspended on Wednesday.

Although Cemex won the first stage of the tender for Semen
Gresik after beating Switzerland's Holderbank Financiere Glarus,
Sofyan said other bidders, including Holderbank, would be invited
to submit proposals within one month, starting Monday, to top
Cemex's bid.

"But if no other bidders top Cemex's bid within 30 days, Cemex
will be the winner," he said, adding that Cemex would also be
given an opportunity to increase its offer to top any new bids.

He said that if Cemex won the deal in the next 30 days, it
would seek to buy another 16 percent stake of Semen Gresik's
shares through a tender offer at a price of $1.38 per share on
the local bourse.

This would give the Mexican cement maker 51 percent of the
country's largest cement maker.

"The proposal on the tender offer will be submitted to Bapepam
(the Capital Market Supervisory Agency) on Tuesday," he said.

Conditional

Sofyan said the Indonesian government had an option to sell
its remaining 30 percent stake in Semen Gresik to Cemex in the
next five years at the same price of $1.38 per share, plus an
annual premium of 8.2 percent.

Sofyan said that Minister of Finance Bambang Subianto signed
the conditional sale and purchase agreement with Cemex earlier
yesterday.

Another deputy to the state minister of the empowerment of
state enterprises, Herwidayatmo, said the agreement would require
Cemex to pay the government a supplementary amount of up to $129
million in 2006 for the 35 percent stake it was bidding for now
if the actual performance of Semen Gresik surpassed expectations.

He said Cemex had committed itself to investing $750 million
until 2006, including an early investment worth $50 million to
strengthen Semen Gresik's capital in the first year of entrance.

Javier V. Bafarull, president of Cemex Asia PTE Ltd, a
subsidiary of Cemex SA for the Asia Pacific region, said Cemex
had pledged to invest a total of $4 billion in Semen Gresik over
the next 30 years.

Such a huge planned investment was aimed at increasing Semen
Gresik's production capacity to 40 million metric tons per year
in 2015 from 12.7 million tons at present, Bafarull said.

"Our long-term target is to keep the 40 percent market share
in the domestic market and maintain a growth rate of between 6
percent and 9 percent per annum," he said.

Cemex, founded in 1906, produces a total of 51 million tons of
cement per year from its operations in Mexico, Spain, Venezuela,
Panama and the Dominican Republic.

Semen Gresik is one of 12 state-owned companies to be
privatized by the government in an effort to raise about $1.5
billion in fresh funds to help lift the country out of its dire
economic condition.

Semen Gresik has been in the spotlight in recent weeks after
its stock price shot up more than 50 percent since early May to
June 18, prompting Bapepam to set up an investigation to probe
alleged insider trading in the company's stocks. The
investigation is still ongoing. (aly)