Semen Cibinong's $250m write-off plan OK'd

Semen Cibinong's $250m write-off plan OK'd

JAKARTA (JP): Shareholders of publicly listed cement producer
PT Semen Cibinong approved on Tuesday management plans to write
off the company's controversial "missing" deposits worth over
US$250 million, clearing the way for Swiss cement group Holcim
Ltd. to become the company's majority shareholder.

Semen Cibinong shareholders also approved a $1.18 billion debt
restructuring plan, under which Holcim agreed to purchase a
controlling stake in Cibinong.

Semen Cibinong corporate secretary Jannus Hutapea said that
following the shareholders' approval, the company could ink a
deal for a debt restructuring deal by late August.

"The write off of the company's time deposits is part of its
debt restructuring deal with Holcim, as they want to clear up the
company's balance sheet," Jannus told reporters after Cibinong's
annual and extraordinary shareholders meeting.

The $250 million in uncollectable deposits have been a major
drawback to Cibinong's financial performance over the past three
years when they first appeared as diminution of investment value
in the company's balance sheet.

Last year, the company booked a heavy net loss of Rp 6.91
trillion (about $611 million) as against a net profit of Rp 25.84
billion a year before.

Semen Cibinong attributed the drop to the uncollectable
deposits, worsened by foreign exchange losses of Rp 2.75
trillion, and financial charges of Rp 1.11 trillion.

Semen Cibinong, which accounts for more than 21 percent of the
total national cement capacity of 46.23 million metric tons,
recorded a 23 percent surge in local sales to 3.2 million tons
from 2.6 million tons in 1999.

The controversy over the "missing" deposits surfaced in 1999,
when it caused Cibinong to include a disclaimer in its financial
report.

Semen Cibinong said it had placed time deposits worth $128.5
million with the Bank of the Central Pacific Limited in Vanuatu,
and another $118.2 million at the Far East Bank Limited in the
Cook Islands.

In 1999, the company sought to withdraw the deposits but was
unable to do so, as the two banks faced liquidity constraints.

Speculation then rose that the $250 million went missing,
after the company was unable to prove the existence of the time
deposits.

Semen Cibinong refused to make public its time deposits
certificates, reasoning that creditors, with whom it was in
negotiation, might freeze the deposits.

The company once considered taking legal actions against the
two banks, but its lawyer warned that its chances of winning a
legal battle were slim.

The company then assigned two public accountants, Moores
Rowland in Vanuatu, and BDO Spiders in New Zealand to seek
financial information on the two banks. Both consultants failed.

In fact, Internet search engines are unable to retrieve basic
information on the banks, other than their names.

Jannus said shareholders had mandated Semen Cibinong to
negotiate the return of its time deposits with the two banks.

But he declined to say whether such an attempt would be
workable, given Semen Cibinong's scant knowledge of the banks.

He pointed out that despite the write-off of the $250 million,
Semen Cibinong retains the right to collect its time deposits.

Commenting on the debt restructuring deal, Jannus said it
would expand Holcim's stake to 74.5 percent from the present 12.5
percent.

The acquisition is made up of three stages. In the first
stage, Holcim will purchase Semen Cibinong's existing debts at a
discounted rate from creditors, for which the company is to set
aside $175 million.

After acquiring the debts, Holcim will convert them into
equity to increase its stake in Semen Cibinong to 58.7 percent.

In the second stage, Semen Cibinong will convert the remainder
of its debt principal into new long term debts worth $500
million. The rest will be converted into equity amounting to 26.4
percent of its shares; here Holcim's stake will rise by another
7.53 percentage points.

In the third stage, Holcim would purchase the remaining stake
from Semen Cibinong's current single majority shareholder, PT
Tirtamas Majutama, owned by business tycoon Hashim
Djojohadikusumo.

Upon the completion of the debt restructuring deal, Tirtamas
will have relinquished all its 43.31 percent stake in Semen
Cibinong.

In addition, the deal will see the shares of the investing
public diluted to 6.4 percent from the present 44.19 percent.
(bkm)