Semen Gresik to float rights shares

Semen Gresik to float rights shares

JAKARTA (JP): The minority shareholders of the publicly-listed
state-owned cement firm PT Semen Gresik voted yesterday in favor
of the company's proposal to acquire two other state-run cement
companies, PT Cement Padang and PT Semen Tonasa.

Semen Gresik's president, Anang Fuad Rivai, told journalists
after an extraordinary meeting of shareholders at the Hilton
Executive Club that the company had secured 54.47 percent of
minority votes.

Those opposed to the acquisition plan represented 369,000
shares, only 1.01 percent of the total 36.44 million minority
shares, and abstentions represented 307,000 shares, Anang said.

Under Indonesian regulations, any public company's move to
acquire another company needs the approval of its minority
shareholders.

Semen Gresik announced early last month its plans to
consolidate its production capacity with that of the two cement
companies.

Anang said that the acquisition of the two cement firms would
enable Semen Gresik to improve operational efficiency and market
penetration with nationwide distribution.

He said Semen Gresik, with its production units in Gresik and
Tuban, East Java, focuses distribution in East and Central Java
and Semen Padang, with its plant in Padang, West Sumatra, serves
western provinces, while Semen Tonasa, with its production
facilities in Tonasa, South Sulawesi, concentrates on marketing
in the eastern provinces.

Rights

Yesterday's meeting also approved Semen Gresik's plan to float
444,846,000 rights shares at an offered price of Rp 3,275
(US$1.47) per share to finance the acquisition and expand the
company's production capacity.

"Shareholders can buy three rights shares for each of their
existing shares," Anang said, adding that the rights issue would
be held on Aug. 7.

He said the acquisition of the two cement firms would cost
Semen Gresik Rp 1.06 trillion ($478 million) or about 74 percent
of the capital to be raised. Five percent of the proceeds will be
used to repay the debts and strengthen the capital structure of
Semen Padang, while the rest will be used to expand Semen
Gresik's own production capacity.

Semen Gresik was initially scheduled to conduct an
extraordinary shareholders' meeting last Tuesday. However, the
meeting was unexpectedly adjourned until yesterday after Anang
was suddenly summoned by Minister of Industry Tunky Ariwibowo
when the meeting was about to start.

Many speculated that the postponement of last Tuesday's
meeting was prompted by pressure from the country's current
largest cement producer PT Indocement Tunggal Prakarsa, which
does not want its market standing to be shaken by Semen Gresik
after the consolidation.

"It had nothing to do with Indocement. Pak Ari (Minister
Tunky) just wanted to give me some jobs to do because he was
about to go abroad for post-CGI meetings," Anang said, referring
to the World Bank-sponsored Consultative Group on Indonesia
(CGI), which pledged on Wednesday to help Indonesia with total
aid of $5.36 billion.

The acquisition of the two cement firms will boost Semen
Gresik's annual production capacity to 8.58 million tons from the
current 4.1 million tons. Semen Padang's current annual capacity
stands at 3.3 million tons, while Semen Tonasa's is 1.3 million
tons.

After the completion of the construction of Semen Tonasa's new
production unit next year, Semen Gresik will have a combined
annual capacity of 10.88 million tons, making it the largest
among cement producers in Indonesia. Currently, Indocement is the
largest cement producer, with a capacity of 9.2 million tons per
annum.

Anang said Semen Gresik started building a new cement
production facility in Tuban early this year. The construction of
the new facility, which will have an annual capacity of 2.3
million tons, will be completed by the middle of 1997 and will
start commercial production by early 1998.

Semen Gresik plans to start constructing another cement
production unit in Tuban later this year. The unit, which will
also have an annual capacity of 2.3 million tons, is expected to
start commercial production in the middle of 1998.

The company plans to build a new cement production unit with
an annual capacity of 2.3 million tons in Indarung, West Sumatra,
early next year, which is expected to start commercial production
in 1998.

"In 1998, our combined annual capacity will reach 17.8 million
tons. And it will still be the largest producer in the country,"
Anang said.

Semen Gresik, listed on the Jakarta Stock Exchange in 1991 and
the first state-owned Indonesian enterprise to be privatized,
recorded net sales of Rp 309 billion and a net profit of Rp 54.7
billion last year. (rid)