Minister holds up recommendation for Djajanti's share issue

Minister holds up recommendation for Djajanti's share issue

JAKARTA (JP): Minister of Forestry Djamaloedin
Soeryohadikoesumo will not recommend a share issue for PT Artika
Optima Inti (AOI) unless the Djajanti Group's wood panel
manufacturer is able to fulfill its forest concession obligations
in Irian Jaya.

Djamaloedin said yesterday that based on the company's forest
concession agreement, it is required to develop a wood processing
unit in Irian Jaya.

The major part of the wood from the company's Irian Jaya
concession should be processed in Irian Jaya. The minister's
recommendation is contingent upon AOI's commitment to fulfilling
its obligation.

The logs from AOI's Irian Jaya forest concession are now
processed on Seram island in Maluku, the company's wood
manufacturing center in the eastern part of Indonesia.

Theo Lekatompessy, AOI's corporate secretary, told The Jakarta
Post that the reason the wood is processed on Seram island is
efficiency. The company's forest concessions are not only located
in Irian Jaya but also in Sulawesi and Maluku.

He said that, in 1980, Irian Jaya's governor of the time,
Isaac Hindom, approved AOI's request to take wood from there to
be processed on Seram island.

Hindom is now an adviser to the Djajanti Group.

Going ahead

A.D. Erlangga, AOI's forestry director, told newsmen in the
public presentation on the planned share issue yesterday that the
company will go ahead with its plan to sell 66 millions shares,
claiming AOI has already fulfilled all of the requirements as set
by the ministry.

He explained that the forestry ministry team is still doing a
site examination of the company's 17 forest concessions.

The company is expected to raise Rp 400 billion to Rp 500
billion from the share offerings, of which 38 percent will be
used to repay debts, 33 percent to finance the acquisition of a
70 percent stake in Maluku Dinamika Semen, a cement company in
Ambon, 10 percent to purchase electrical turbines, seven percent
to develop industrial forests, six percent to increase working
capital and six percent to buy new machines.

The company, which operates 12 lines of plywood production in
Seram, yesterday reported a net profit of Rp 47.4 billion (US$22
million) from a total sales of Rp 282.7 billion last year.

The forestry minister said that he did not object to the way
the funds to be raised from the public offering would be used,
but suggested that at least 70 percent of the funds be invested
in forestry, especially the forest concession which the firm has
been cultivating for so many years.

"Without forest conservation they cannot maintain their
business and the investors will not have a profitable
investment," he said.

The initial public offering of AOI's shares is scheduled for
May 18 to May 20. The firm is expected to be listed on the
Jakarta Stock Exchange and Surabaya Stock Exchange on June 22.
(03/10)