Salim UIC sale sparks more divestment fears

Salim UIC sale sparks more divestment fears

SINGAPORE (Reuters): Indonesia's Salim group's stake sale in
Singapore's United Industrial Corp Ltd (UIC) has sparked fears of
more divestment by Indonesia's former number one tycoon, analysts
said.

The sale of UIC by the Salim group -- owned by Indonesian Liem
Sioe Liong and son Anthony Salim -- had been widely expected
after family fortunes turned with the fall of President Soeharto.

Analysts said the family had been trying to dispose of non-
core assets, not just in Singapore, but elsewhere in the region
to meet escalating debt after Indonesia's financial and political
turmoil.

Forbes magazine estimated Liem's personal fortune at US$4
billion in February 1998, but said that fell to $1.7 billion
shortly after Soeharto's downfall.

In December, the Salim family has sold its 60 percent stake in
the world's largest noodle maker Indofood, its major cash cow,
for $570 million to Hong Kong-based First Pacific Co Ltd and
Japan's Nissin Food Products Co.

On Tuesday, the group said it would sell all its 23 percent
stake in property-linked UIC to Hong Kong property-related HKR
International Ltd for about S$310.9 million.

UIC owns 57 percent stake of Singapore Land, which is one of
Singapore's largest prime office landlords.

Salim's other interest in Singapore include a 70 percent stake
in food-related company QAF Ltd and a 21 percent stake in Jurong
Cement.

QAF shares ended up 10 cents at S$0.71 on about four million
shares traded, while Jurong Cement closed five cents lower at
S$2.50 with 10,000 shares traded.

Tan Kong King, managing director of Salim's Singapore arm KMP
Pte Ltd, was quoted by the local papers that the group had no
intention to sell its stake in Jurong Cement or QAF.

But analysts were skeptical.

"There'll definitely be more sales to come because of his
domestic problems," said one analyst with a U.S. brokerage.

Analysts said HKR's purchase of the Salim stake at S$1 a share
-- albeit above Wednesday's closing price S$0.90 -- was reasonable
as the buyer immediately becomes a major commercial landlord in
Singapore's central business district.

"The revalued net asset value of UIC is about S$1.20, so the
purchase is below that," said a local brokerage analyst.

But many said the price was slightly steep if the Hong Kong
firm launches a hostile takeover for the remaining UIC shares
held by Wee Cho Yaw.

Wee, chairman of the United Overseas Bank, holds about a 16
percent stake in UIC and has been calling the shots in the group.

"Average rentals are expected to fall by about 10 percent per
annum from this year to 2000. That will affect their net rental
income for those years," said the local analyst.

The gearing of UIC, whose interest spans from properties to
the technology sector, is considered low -- between 15 to 20
percent based on its 1997 book net asset value.

UIC shares led actives on Wednesday with about 50 million
units traded.

For the year ended Dec.31, 1997, UIC's net profit was at
S$56.57 million, compared with S$68.62 million the previous year.

Barra's The Estimate Directory has a consensus net profit
forecast of $43.6 million for full year 1998.

The group is expected to announce its 1998 results some time
in March.

Analysts mostly saw the Salim stake sale as positive for UIC
and had a buy call on the stock on the takeover potential.