Tri Polyta makes $127m from share sales on Nasdaq

JAKARTA (JP): PT Tri Polyta Indonesia, a polypropylene resins producer, announced here yesterday that it generated US$127 million from the sale of 29 percent of its shares through the Nasdaq capital market in the United States.

"About $104 million out of the proceeds were used to repay the company's debt from to a syndication of Indonesian state banks which include Bank Rakyat Indonesia, Bank Bumi Daya and Bank Dagang Negara," said Peter F. Gontha, a director of the company.

Polypropylene is a raw material used in plastics production.

Tri Polyta, set up in Anyer, West Java, in 1992 with an initial investment of $250 million and an annual production capacity of 250,000 tons, offered its shares on Nasdaq in July.

Tri Polyta is 32 percent owned by the Bimantara Group, a group of companies controlled by a son of President Soeharto, 8.9 percent by businessman Prajogo Pangestu, seven percent by Henry Pribadi, 5.5 percent by Ibrahim Risjad and 5.5 percent by Sudwikatmono, a cousin of Soeharto.

Gontha said that, according to the American Generally Accepted Accounting Procedure (GAAP), the company generated net profits of $5.8 million in the first quarter of this year. Last year, the company generated an after-tax profit of $10.1 million.

The company's prospectus shows that the company's assets increased to $305.9 million as of March from $270.0 million as of the end of last year.

When asked about the role of the government's protection of Tri Polyta's products against imports in the growth of its business, Gontha said: "Of course, the protection has contributed to our profits."

The government imposes a 20 percent duty and a 20 percent surcharge on imports of polypropylene to protect Tri Polyta's products against imports. Furthermore, the company is also exempted from the 5 percent duty on the imports of propylene, the most important raw material for the production of polypropylene resin.

"I must emphasize that people buy our shares because they are convinced with our performance, not because of the protection," said Gontha.

"We have already started working to prepare ourselves for GATT (General Agreement on Tariffs and Trade), which requires its signatories to lower tariffs," he added.

The executive acknowledged that the price of the company's products is about 10 percent higher than the international price of about $800 per metric ton.

"But we offer security of supply, delayed payment and delivery service," he said.

Chandra Asri

Gontha said that in the near future, Tri Polyta will procure propylene from its affiliate PT Chandra Asri, whose plant is expected to start operating in the first quarter of next year -- about 18 months later than the original schedule.

Chandra Asri's $1.7 billion olefin project is also located in Anyer.

Gontha said Chandra Asri has suffered total losses of $196.2 million due to the delay of its operation, besides the loss of opportunities of sale worth about $657 million.

The Chandra Asri project was temporarily shelved in 1991, when the government announced a policy on the control of the inflows of commercial foreign loans. However, the construction of the project resumed after it is classified as a project with a total "foreign investment".

The project drew criticism last month after State Minister of Investment Sanyoto Sastrowardoyo stated that a protectionist measure will be awarded to Chandra Asri even though the government recently ruled out any protection for new industrial projects.(hdj)