Semen Gresik sale deadline expires without deal

Berni K. Moestafa, The Jakarta Post, Jakarta

The government once again missed the deadline to sell a 51 percent stake in cement maker PT Semen Gresik to Mexico's Cemex SA de CV, as a Friday deadline for the sale expired without a deal.

With the passing of the deadline, Semen Gresik employees dropped plans for a strike, which would have begun today if the government had decided to sell Semen Gresik.

"In light of the Government of Indonesia's decision to postpone the privatization of PT Semen Gresik until next year, Cemex believes there is a very strong likelihood that the government will not exercise the put option that expires today," Cemex said in a statement issued on Friday.

Signs of the deal falling through completely, surfaced last month after the government offered Cemex a complex new deal which was rejected by the subsidiaries and was, at the very least, not well-received by Cemex.

Under a 1998 put option deal with Cemex, the government had been given the right to sell its 51 percent stake in Semen Gresik to Cemex for about $520 million.

It would have allowed Cemex to gain control over Semen Gresik and its two subsidiary units, PT Semen Padang in West Sumatra and PT Semen Tonasa in South Sulawesi.

But the plan has been met by protests allegedly organized by local politicians in Sumatra and Sulawesi, to reject foreign control over Semen Gresik's units.

They demand that Semen Padang and Semen Tonasa become independent of Semen Gresik and kept under government control.

In a sign of support, employees at the three cement companies threatened to strike if the government went ahead with the planned sale of Semen Gresik.

"Because the deadline has passed and nothing happened, there will not be a strike," a Semen Padang official, who refused to be named, told The Jakarta Post.

According to him, some 3,500 Semen Padang employees were ready to strike. If that were to happen the company would lose a daily output of around 17,500 metric tons of cement, he estimated.

Cemex said that despite the fact that the deal has fallen through once again, it would still maintain its current stake of 25.5 percent in Semen Gresik.

Based on the original put option deal, Cemex would have gained a 76.5 percent stake in Semen Gresik which would include Semen Padang and Semen Tonasa. Individual public investors currently own the remaining 23.5 percent, and that would remain unchanged regardless of the Cemex deal.

To appease the people who are opposed to the sale, the government had offered Cemex a new deal last month.

Under that one Cemex would still own a 76.5 percent in Semen Gresik, but only a minority stake in Semen Padang and Tonasa.

Government officials said that they were in talks with Cemex over the latest proposed deal.

But it remains unclear whether the offer was a modification of the 1998 put option deal that had just expired, or built upon an entirely new deal.

Cemex officials were not available to comment on their press statement.