Open bid planned for Krakatau's shares
Open bid planned for Krakatau's shares
JAKARTA (JP): The government is to invite international
bidders to buy part of the country's largest steel producer, PT
Krakatau Steel, next week, State Minister of the Empowerment of
State Enterprises Tanri Abeng said yesterday.
"The competitive bidding process will be held next week after
we appoint the investment advisor tomorrow (today)," he told
reporters following a meeting with Coordinating Minister for
Economy, Finance and Industry Ginandjar Kartasasmita.
He said that the 10 foreign investment banks which would back
up the privatization of the country's 12 state-owned companies in
the 1998/1999 fiscal year would be announced today.
The bidding process for Krakatau Steel would be handled by an
appointed investment bank which must have expertise in the steel
industry, he said.
He explained that after the investment bank selected the best
investor candidates for Krakatau Steel, a one-month due
diligence period, which would include technical and economic
evaluations, would be conducted. The company's management would
be involved in this process.
After that, another one-week evaluation process would be
undertaken to come up with an economic-technical recommendation
which would be handed over to the country's privatization team.
This is headed by Coordinating Minister for Development
Supervision and State Administrative Reforms Hartarto
Sastrosoenarto.
Together with the Minister of Finance, Tanri is a member of
the privatization team.
"The final decision is in the hands of Coordinating Minister
Hartarto," Tanri said, adding that Hartarto would consider all
issues, including the sociopolitical aspects of the deal.
He promised that the stratified privatization process would be
done in a transparent manner.
Tanri was strongly criticized by Krakatau's management early
this week about allegations that he had quietly made a deal with
the Netherlands-based Ispat International to sell 49 percent of
Krakatau's shares for the relatively low price of US$400 million.
The deal would have given Ispat a monopoly in the domestic
steel wire and rod industry.
Tanri denied the accusations, saying that it was not a final
deal.
He also said that the government would make sure the Krakatau
privatization deal would not create a monopoly in the steel wire
and rod market.
"We will negotiate (with the potential investor)," he said,
pointing out that to prevent a monopoly the government may handle
the marketing side.
Tanri also said that the nation would gain by selling a larger
stake of Krakatau because it would get a better price.
The 1998/1999 privatization program is expected to raise a
total of Rp 15 trillion (US$1.3 billion), mainly to support the
state budget which is heavily burdened by huge subsidy
commitments caused by the economic crisis. (rei)