Sinar Mas woes stall acquisition deal

Sinar Mas woes stall acquisition deal

JAKARTA (JP): Publicly listed food producer PT Indofood Sukses
Makmur said on Thursday its US$173 million plan to acquire the
Singapore listed Golden Agri Resources had ran into a snag,
partly due to financial troubles at the latter's holding company,
the Sinar Mas Group.

Indofood president Eva Riyanti Hutapea said that lack of data
on Golden Agri was stalling a due diligence process on the firm.

She stressed that Indofood would not acquire Golden Agri
without conducting due diligence first.

"The due diligence process hasn't begun yet as we're still
waiting for the complete data on Agri," Eva told The Jakarta
Post.

Among the data that was still missing were the audited results
on last year's financial statement of Golden Agri. Eva could not
say why Golden Agri was slow in disclosing the information.

But when asked whether financial woes at the Sinar Mas Group
played a part in the delay she said, "it's one of the reasons."

In May, Indofood said it had entered into a sales agreement
with Sinar Mas for the purchase of Golden Agri.

Under the deal, Indofood will purchase up to 55 percent of
Golden Agri's shares for a price of around $173 million.

Eva initially expected to finalize the deal with Golden Agri
by August, and then seek Indofood's shareholders' approval.

However, a delay in the due diligence process may force
Indofood to revise the timetable for the acquisition.

"The delay is testing my patience ... I'll wait until Aug. 10
at the latest, that's our walking-out date," she said, adding
Indofood may walk out sooner than that.

According to her, Indofood would terminate its deal with
Golden Agri if uncertainties over the acquisition still
persisted.

That could happen, given the problems Sinar Mas has in
disclosing the financial statements of its subsidiaries.

A unit of the group, the New York listed Asia Pulp & Paper
(APP), has recently announced a debt standstill on servicing its
debts worth some $13 billion to local and foreign creditors.

APP has been unable to disclose its financial reports,
including those of its subsidiaries in Indonesia.

The company has instead promised to publish the audited
financial statements for the year 2000 later this month.

Golden Agri, however, is not a unit of APP and belongs to the
Sinar Mas food division under the Singapore-listed Asia Food &
Properties Ltd (AFP).

Eva added that Indofood remained on the lookout for acquiring
new oil palm plantations.

Eva was referring to market rumors that publicly listed PT
Astra International planned to divest its oil palm plantation
unit, PT Astra Agro Lestari, also listed on the Jakarta Stock
Exchange.(bkm)