Soros to acquire Bentoel through third party

JAKARTA (JP): PT Bhakti Investama, a partner of Quantum Fund belonging to U.S. financier George Soros, plans to acquire a majority stake in the ailing cigarette maker PT Bentoel Prima through trading firm PT Transindo Multi Prima.

Bhakti Investama president Bambang Harry Iswanto Tanoesoedibjo said Transindo, currently subdistributor for Bentoel cigarettes in Jakarta and parts of West Java, would issue rights shares to finance the acquisition of a 75 percent stake in Bentoel.

Bhakti Investama would then act as the standby buyer for Transindo's rights shares.

"The rights issue will raise Rp 349 billion (US$47 million) in fresh funds, of which about 90 percent will be used to acquire the 75 percent stake in Bentoel," Bambang said during a press conference after Transindo's extraordinary shareholders meeting.

Transindo shareholders approved the planned acquisition of Bentoel. They also agreed to change Transindo's name into PT Bentoel International Investama and appointed Bhakti Investama president Bambang as its new commissioner.

Bentoel Prima and its subsidiaries produce cigarettes such as Bentoel Mild, Bentoel International and Bentoel Merah.

Bentoel's sales jumped 65 percent to Rp 1.33 trillion in 1998 from Rp 805.5 billion in the previous year. Sales continued to rise in the following year with 1999's third quarter sales reaching Rp 1.4 trillion.

However, responding to questions on whether Bhakti Investama through Transindo's right issue would purchase Bentoel on behalf of Soros, Bambang played down that scenario, saying that Bhakti Investama represented other foreign investors as well.

Besides Soros' Quantum Fund, Bambang said, Bhakti Investama also represented Northern Trust.

"We don't even have a stake in Transindo," he said, adding that Bhakti Investama, as the standby purchaser, would only acquire Transindo's unsold rights shares.

Transindo is 60.42 percent owned by PT Amanat Surya Kudus, 5.1 percent by PT Rajawali Corporation and 35 percent by the public.

Transindo chief commissioner Anisa Himawan said the company would also acquire a 75 percent stake in PT Lestariputra Wirasejati, another cigarette producer with brands including Star Mild and Prinsip.

She said the total acquisition value for Bentoel and Lestariputra was about Rp 350 billion, 90 percent of which was allocated for Bentoel's shares.

"Lestari's 75 percent stake would cost us only Rp 35 billion," she said.

Anisa said that since the rights issue only intended to raise Rp 349 billion in capital, the remaining Rp 1 billion would come from the company's own operational funds.

She said the acquisition of both companies and Transindo's new name would not alter its core businesses, which were general trading, distribution and investment.

She said, however, that Transindo planned to develop its core business into consumer products.

The acquisitions, Anisa said, were aimed at strengthening Transindo's position in the cigarette industry.

She added that Bentoel and Lestari also needed fresh capital to expand their businesses.

After the acquisition, Bentoel would be 75 percent owned by Transindo, 16.88 percent by PT Rajawali Corporation and 7.5 percent by PT Perusahaan Rokok Tjap Bentoel.

Meanwhile, after the acquisition Lestari would be 75 percent owned by Transindo, and 25 percent by individual investors. (03)