Supreme Court rules for Semen Gresik

Supreme Court rules for Semen Gresik

Fitri Wulandari, The Jakarta Post, Jakarta

The Supreme Court has ruled in favor of state-owned cement
producer PT Semen Gresik (SG) to hold an extraordinary
shareholders meeting to replace the board of directors at its
rebellious subsidiary PT Semen Padang.

"The Supreme Court ruling says we are allowed to hold an
extraordinary shareholders meeting at PT Semen Padang to replace
its board of directors and board of commissioners," SG president
Satriyo told journalists at a press conference on Tuesday.

"SG still legally owns 99.9 percent of Semen Padang.
Therefore, SG has the obligation to improve the performance of
Semen Padang," he stressed.

SG is a parent company for two subsidiaries namely Semen
Padang (in West Sumatra) and PT Semen Tonasa (in South Sulawesi).
The three have a combined production capacity of 17.25 million
metric tons, making SG the largest cement maker here, controlling
a 45 percent share of Indonesia's cement market.

The Supreme Court's decision might be a light at the end of
tunnel for SG which has been mired in conflict with Semen Padang
over a government privatization plan.

When question if SG will replace the current Semen Padang with
privatization supporters, Satriyo said, "We want to replace it
(the management) with business-minded people who will develop the
company. Any good development will bring good things for all
shareholders."

SG is 51 percent owned by the government, 23.46 percent by the
public and 25.53 percent by Mexico's Cemex SA de CV who became SG
shareholders in 1998.

The conflict between SG and Semen Padang centered around the
latter's rejection of a government plan to sell another 51
percent stake in SG to Cemex.

Since then demands for a spin-off of Semen Padang from SG had
been mounting forcing the government to delay the privatization.

Semen Padang has rejected SG's plan to hold an extraordinary
shareholders meeting to replace Semen Padang's board of directors
and commissioners.

State Minister for State Enterprises Laksamana Sukardi has
recently sent a letter to the governor of West Sumatra approving
the demand for a spin-off as long as it did not violate the law.

But Satriyo stressed that any decision for a spin-off lies in
the hands of SG's minority shareholders including Cemex.

Legislation on limited liability companies and capital market
rule that any major corporate action should have approval of
minority shareholders.

The spin-off plan is unfavorable as it will not only harm
investor confidence but also force the government to set aside
hefty compensation for SG's minority shareholders. Semen Padang
and Semen Tonasa assets were counted when investors bought shares
in PT Semen Gresik.