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)