Semen Gresik sale deadline expires without deal

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.