S'pore's QAF to buy Indofood through Indonesian company
JAKARTA (JP): Salim Group's executives said the proposed sale of Indofood Sukses Makmur's 50.1 percent shares to the group's Singapore-based company would not break the 49 percent foreign ownership limit imposed on listed local companies.
Benny Santoso, a senior director of Salim Group's Indocement Tunggal Prakarsa said that QAF, the business group's subsidiary based in Singapore, would buy the group's 50.1 percent stake in Indofood through its Indonesian subsidiary PT Marga Lestari Abadi.
Benny said QAF's proposed acquisition was legal according to the government regulation No. 20, 1994 which states that a foreign company can have a maximum 95 percent in an unlisted local company.
Both Indocement and Indofood are listed on the Jakarta stock exchanges and are both controlled by the Salim Group.
Analysts said the proposed internal acquisition of Indofood by QAF would violate the Capital Market Supervisory Board's regulation and the finance ministerial decree that forbids foreign investors to own more than 49 percent in a publicly listed local company.
Benny also dismissed critics who said the group's plan to shift Indofood assets was unethical as it would cause great loss to the Indonesian government.
"Indocement tax would rise because the restructuring would increase the profit and reduce the interest costs by about Rp 150 billion," he said.
"This means that additional tax from Indocement would amount to Rp 45 billion a year," he said.
PT Indocement, 60 percent owned by the Salim Group, 25 percent by the government, and 15 percent by the public, will divest its 50.1 percent stake in Indofood under the group's latest restructuring plan.
Under the proposed spin-off, Indocement would give most of its Indofood shares to the existing shareholders as a special dividend and sell the remaining shares to the Sampoerna family, which currently has a 5.63 percent stake in the food giant.
After that, QAF would buy the Salim Group's 45 percent stake in Indofood through PT Marga, in addition to the 5.6 percent Indofood stake it would directly buy from the Sampoerna family.
This will allow the Singaporean company, which is owned 70 percent by the Salim Grouo, to have a 50.1 percent stake in Indofood.
According to Bisnis Indonesia Monday, Salim Group would raise about Rp 4.2 trillion (US$1.68 billion) from the purchase of its 45 percent stake in Indofood by Singapore-based QAF Ltd.
He said QAF would issue right shares to fund the acquisition of the 50.1 percent stake in Indofood which would be worth Rp 4.6 trillion.
Analysts said the Salim Group's restructuring would only benefit majority shareholders.
"Despite Indocement's claim that the extraction of food operations from the company would unlock value for investors due to its increased earning predictability, we are not satisfied that the move will be a good one for shareholders," DBS's research division said in its stock market commentary.
The securities company said that turning Indocement into a pure cement company was not so encouraging, given the prospects of the country's cement industry.
The restructuring would also have no fundamental impact on Indofood as it basically only concerns a change in ownership and transfer of shares, it said.
There might be some marginal benefits in terms of synergy through its new parent company WAF in Singapore, the securities company said. "But we believe Indofood will remain an Indonesian market player in the near future," it added. (das)