Sinar Mas says it won't inject cash in Amcol
Sinar Mas says it won't inject cash in Amcol
JAKARTA (JP): Sinar Mas chairman Eka Tjipta Widjaja said
yesterday his group would not inject cash into the troubled
Singapore-based Amcol Holdings.
He said his local companies would takeover the majority of
Amcol through a share swap arrangement.
"The deal will not involve cash but an injection of the
group's assets in the Singapore firm under a share swap," he said
after the opening of Eka Life's new headquarters.
He refused to say which companies would be integrated into
Amcol.
Amcol was put under judicial management in July after a Price
Waterhouse audit revealed it had serious cash flow and debt
problems.
According to earlier reports, Sinar Mas agreed to rescue Amcol
and was expected to inject assets worth around US$2 billion into
the company, which would be renamed Golden Amcol.
Sinar Mas managing director Indra Widjaja, one of Eka's sons,
said his company's palm oil and property divisions and its noodle
factory in China would be transferred to Amcol.
Indra, the president of the group's banking arm, Bank
International Indonesia, said Sinar Mas aimed to use Amcol to
spearhead its regional expansion in food, palm oil and property.
Eka confirmed the Amcol takeover would give Sinar Mas better
access to world markets.
"It is a matter of establishing a trading house for the
group's Indonesian companies. We don't have a plan to relocate
Sinar Mas' core activities to Singapore," Eka said.
The takeover would help Sinar Mas acquire loans from
international banks, he said, adding that companies in Singapore
often had better credit access.
"I am not saying that Indonesian companies are not trusted by
international financial institutions," he said. "Many Indonesian
companies have raised loans overseas but their lending rates are
higher than those charged for Singaporean companies," he said.
The Sinar Mas chairman denied yesterday an allegation that his
group's massive investment in China was capital flight.
"It is only a matter of a business expansion," he said, adding
that the planned investments in China, which would equal around
20 percent of the group's total investments in Indonesia, would
be financed through the group's Singapore unit.
According to reports, Sinar Mas planned to invest between US$3
billion and $5 billion to build pulp and paper plants in China in
the next three to five years.
The Sinar Mas is now the largest pulp and paper manufacturer
in China. Its plant in Ningbo can produce up to 600,000 tons
yearly.
Eka said his company was building a plant in Zhenjiang with an
expected annual capacity of about 1.5 million tons, and that it
planned to build a plant in Hainan.
Indra said Sinar Mas owned at least 50 percent of each plant,
adding that its total investment would not exceed $3 billion.
"I do not see it (the expansion in China) as capital flight,
because there was not much cash involved," Eka said.
The massive investments are expected to be funded through
Sinar Mas' Singapore-based subsidiary, Asia Pulp and Paper
Company, which is planning to issue bonds to finance the
projects. (04)