Semen Gresik to spin off Semen Padang

JAKARTA (JP): State Minister of Investment and State Enterprises Development Laksamana Sukardi said on Monday the government would spin off PT Semen Padang from state cement maker PT Semen Gresik in a bid to smooth the plan by Mexico's Cemex SA de CV to become the majority shareholder in the company.

"We will spin off Semen Padang," Laksamana told reporters on the sidelines of a business gathering.

He declined to provide further details.

Laksamana was responding to concerns that the plan by Cemex to increase its stake to become the majority shareholder in Semen Gresik would be rejected by the people of Padang in West Sumatra province.

The West Sumtara-based Semen Padang is wholly owned by Semen Gresik. An earlier attempt by Cemex to obtain a majority stake in Semen Gresik failed following the West Sumatran people's widespread rejection of foreign control in Semen Padang.

Local people have argued that Semen Padang's factory is built on their heritage land.

Laksamana said on Friday the government had tentatively agreed to a proposal by Cemex to increase its stake to become the majority shareholder in Semen Gresik, the country's largest cement maker.

Cemex currently owns 25.53 percent of the publicly listed cement maker. The government owns 51 percent, and the public 23 percent.

Separately, Semen Gresik president Urip Timuryono said on Monday that the company had no objections to divesting its ownership in Semen Padang.

"It's very possible. We have no objection to the demand for the group to spin off Semen Padang," Urip said on the sidelines of a meeting with the House of Representatives Commission V for trade and industry.

Semen Gresik, based in East Java, acquired Semen Padang from the government in 1995 as part of the consolidation of state- owned cement factories. The company also acquired another government-owned cement maker in South Sulawesi called PT Semen Tonasa.

Urip said the value of Semen Padang must be determined by an independent appraisal before the sale process started.

He said his office was currently in the process of talking with people from Semen Padang and the West Sumatran administration over the spin off plans.

He stressed, however, that the spin off plans must be conducted in a transparent manner.

Timuryono declined to comment on Cemex's plans to become the majority shareholder in Semen Gresik, saying his office was still talking with its Mexican counterparts.

Cemex, the world's third largest cement maker, bought a 14 percent stake in Semen Gresik in 1998 for US$1.38 per share, or $114.6 million.

The previous administration of president B.J. Habibie initially planned to sell 35 percent of the government's stake in Semen Gresik as part of its privatization program to raise cash to finance the state budget.

Cemex won the first round of the bidding process for the government's 35 percent stake in July 1998.

But the decision was met with protests by West Sumatrans as it would have given Cemex control over Semen Gresik as well as Semen Padang. This forced the Habibie administration to divest only 14 percent of the government's stake.

Cemex now owns a 25.53 percent stake in Semen Gresik after increasing its investment in the company by buying additional shares on the open market.

Laksamana is now under pressure to raise some Rp 6.5 trillion from the government's privatization program this year to help finance the April-December 2000 state budget.

The privatization revenue target was initially set at Rp 5.9 trillion, but legislators forced the government to raise the target in order to fund a larger increase in the salaries of government employees.

The further divestment of Semen Gresik would help raise the privatization proceeds target.

The government plans to divest between 20 percent and 49 percent of its stake in eight state companies. These companies are fertilizer firm PT Pupuk Kaltim, airport operator PT Angkasa Pura II, coal mining company PT Bukit Asam Batubara, plantation firms PT Perkebunan Nusantara III and PT Perkebunan Nusantara IV, pharmaceutical manufacturers PT Indo Farma and PT Kimia Farma, and publicly listed mining firm PT Aneka Tambang.

Separately, Riza Primadi, public relations chief at Laksamana's office, said on Monday that Pupuk Kaltim would be the first company to go on sale through an initial public offering (IPO) on both the domestic and the overseas market.

He said that the IPO was expected to be completed either in April or May.(rei/cst)