Spin-off plan won't affect bond issue: Gresik executive
JAKARTA (JP): State cement producer PT Semen Gresik said on Wednesday that the government's plan to spin off the company's two subsidiaries would not effect its plan to issue bonds in July this year.
"The spin-off and the bond issue are two separate things," the company's head of finance and accounting Bambang Sulawidjaja told a media briefing.
He explained that Semen Gresik's financial resources would be strong enough to pay back the bonds even if its two subsidiaries -- PT Semen Padang and PT Semen Tonasa -- were hived off.
According to Bambang, the two companies only contributed about one-third of Semen Gresik's total revenues. "We are big enough to fulfill our commitments to our bond holders," he said.
He said the Rp 1.2 trillion bond issue with a maturity period of five years, would be used to repay part of Semen Gresik's medium-term notes.
The company's medium-term notes totaled Rp 1.75 trillion (based on an exchange rate of Rp 9,500 per dollar). This figure comprised US$162.21 million in U.S. dollar denominated notes, which would mature in January next year, and Rp 214.6 billion notes which would mature in April 2002.
The rest of the debt would be paid using the company's own funds, he said.
Semen Gresik's bond-issue team head Amat Oemar Asnar said the company would register the bond issue plan with the Capital Markets Supervisory Agency (Bapepam) on May 10. "We hope we will be able to launch the bond offering in July," he added.
Bambang also said that the underwriters had made a "full commitment" to the bond issue, meaning the underwriters would buy all the bonds not taken up by investors. The underwriters included PT Danareksa Securities, PT Bahana Securities and PT Citicorp Securities Indonesia.
The government has agreed to spin off the two subsidiaries of Semen Gresik due to pressure from local communities near the Semen Padang plant in West Sumatra and the Semen Tonasa plant in South Sulawesi.
The local residents demanded the separation of Semen Padang and Semen Tonasa after Mexico-based cement producer Cemex bought part of the government's stake in Semen Gresik.
Semen Gresik, which was merged with Semen Padang and Semen Tonasa in 1995 as part of a consolidation of state-owned companies, is 25.53 percent owned by a subsidiary of the Mexican company, PT Cemex Indonesia.
The spin-off plan has been widely criticized. Observers said that the measure would be a setback to the government's plan to increase greater investor ownership of state enterprises, and would greatly damage foreign investors' trust.
Bambang said there were many considerations to be examined before separating the three companies, not least the settlement of Semen Padang's debts to its holding company, Semen Gresik.
Semen Gresik gave its corporate guarantee, along with Export Credit Agencies (ECA) from Germany, France, and Denmark, for Semen Padang's $74.5 million debt to ABN Amro bank to finance its Indarung V project, he said
As of 2000, Semen Padang's debt to ABN Amro totaled $64.6 million.
"If the spin-off takes place, then somebody would have to replace Semen Gresik as Semen Padang's guarantor, and I don't think the government would be willing to do that," he said. (tnt)