Timber firm Barito to buy Enim Musi Leastari

The Jakarta Post Jakarta

One of the country's largest timber companies, PT Barito Pacific Timber announced on Thursday that it had provided US$255.6 million in cash to buy a 60 percent stake in PT Enim Musi Lestari, which manages some 296,400 hectares of industrial plantations.

Barito currently holds a 40 percent stake in the company, while the remaining 50 percent is owned by PT Tunggal Setia Pratama and 10 percent by PT Muktilestari Kencana.

The publicly listed company unveiled the plans in a statement to the Jakarta Stock Exchange.

It said the move, which will put Barito as the sole owner of Enim Musi, was aimed at helping resolve the lack of raw material supply from its forest concession areas for plywood manufacturing.

Barito said the raw material shortage was caused by the increasing demand from the international market for an "ecolabel" certificate for raw material. The certificate would only be provided for timber coming from industrial plantation estates, not from natural forests.

The country's plywood industry still relies on raw materials from natural forests as its supply from industrial plantation estates was still relatively small.

Barito said the acquisition was also aimed at an increased availability of raw material needed by Barito's subsidiary PT Tanjung Enim Lestari Pulp and Paper. Barito owns a 40 percent stake in Tanjung Enim Lestari.

Barito also said that the acquisition was part of the company's restructuring plan to boost synergy and efficiency of in the company.

Shareholders are expected to approve acquisition program on March 31 extra ordinary shareholders meeting.

Barito was established by timber tycoon Prajogo Pangestu, a friend of former president Soeharto.