Shareholders okay Indocement's restructuring plan

JAKARTA (JP): Independent shareholders unanimously approved yesterday PT Indocement Tunggal Prakarsa's plan to spin-off and sell its 50.1 percent ownership in PT Indofood Sukses Makmur to focus its business on cement.

At an extraordinary meeting, 99.7 percent of independent shareholders approved the sale of Indocement's 193.09 million Indofood shares, representing 10.54 percent of Indofood's share capital, to Putera Sampoerna and his family at the agreed price of Rp 5,350 a share (US$1.9).

The Sampoerna family holds a 5.63 percent stake in the food giant, which it bought last March at the effective price of Rp 4,700 a share.

Indocement's executive director Benny S. Santoso said the company would use all the proceeds from the sale of its Indofood shares to the Sampoerna family to repay its debts.

"This way, we will be able to save about Rp 150 billion in interest payments a year," Benny told journalists after the shareholders meeting.

Independent shareholders also approved the company's spin-off plan by proportionally distributing 724.33 million Indofood shares, or 39.56 percent of Indofood's total common stocks, in the form of a special interim dividend in-kind to the existing shareholders.

Every shareholder holding 10 Indocement stocks will get three Indofood shares as dividend in-kind. The dividend's distribution is planned for Sept. 30.

Indocement acquired a 51 percent stake in Indofood in 1992, along with the assets and business of PT Bogasari Flour Mills and Wisma Indosemen building, transforming it from a cement to a diversified company.

In 1995, Indocement sold Bogasari to Indofood to streamline its food operation.

Indocement president Sudwikatmono said the company and shareholders would benefit from the restructuring.

He said the restructuring would increase shareholders' value as the company now focused mainly on cement.

"We expect that after restructuring, investors will better evaluate our share prices," he said.

So far, Indocement shares performed below par, compared with other listed cement companies -- state-owned PT Semen Gresik and PT Semen Cibinong.

The price earning ratio of Indocement's cement business was only 6.5 times, compared to Semen Gresik and Semen Cibinong's ratio which could reach between 10 and 15 times.

Sudwikatmono said shareholders would gain from the sale of Indocement's investment in Indofood.

Indocement's total investment in Indofood since 1992 amounted to Rp 1.7 trillion, while the value of Indocement's Indofood shares now reached Rp 4.9 trillion, representing a return on investment of 33.18 percent per annum.

Indocement is 42 percent controlled by PT Mekar Perkasa, 12.65 percent by PT Citrabuana Dirgapuri, 4.42 percent by PT Kaolin Indah Utama, 0.52 percent by controlling individuals -- all under the Salim Group -- 25.73 percent by the government and 14.62 percent by the public.

Before the spin-off, Indofood was 50.1 percent owned by Indocement, 5.63 percent by the Sampoerna family and 22.74 percent by companies under the Salim Group.

After the restructuring, the government will hold directly a 10.18 percent stake in Indofood, the Sampoerna family 16.17 percent, the public 27.89 percent, companies and individuals under the Salim group 45.76 percent.

Benny said as independent shareholders approved the spin-off and sale of Indocement's Indofood shares, the Salim Group would now proceed with the second stage in its restructuring plan, selling Indofood's shares to the group's Singapore-listed food company, QAF Ltd.

The Salim Group will sell a 44.47 percent stake in Indofood to QAF at Rp 5,100 a share. In addition, QAF will acquire another 5.63 percent stake from the Sampoerna family, at Rp 5,100 a share, to have a 50.1 percent controlling stake in Indofood.

QAF will issue rights shares and seek bank loans to fund the acquisition.

But the planned second stage of restructuring must be approved by QAF's minority shareholders before the Salim Group go ahead with the plan. (rid)

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