Two Asian tycoons to set up seven sugar projects
Two Asian tycoons to set up seven sugar projects
JAKARTA (JP): Two of Asia's wealthiest and most powerful
businessmen are forming an alliance that will create one of the
largest sugar empires in the world.
Indonesia's Liem Sioe Liong and Malaysia's Robert Kuok plan to
merge their sugar interests in Indonesia under a new holding
company and spend more than US$1 billion on seven projects which
will cover a total area of more than twice the size of Singapore
in south Sumatra.
According to the Singapore-based Business Times daily, each of
the projects, costing about $130 million, will cover about 25,000
hectares, has a planted area of 20,000 hectares, a factory
capable of crushing 10,000 tons of cane a day and producing about
120,000 tons of sugar a year.
Two of the projects have been completely developed and are in
full operation, while the other five will be developed over the
next 10 years.
The company has obtained loans for one of the five projects
and is now sourcing funding for the remaining four projects.
Nearly half the money or about $70 million for each project
will be for factory machinery and construction, with $20 million
for farm equipment, $10 million for infrastructure development
and $30 million for plantation development.
The shareholders hope to inject $20 million in equity
contributions for each of the projects and generate another $20
million from internal funds.
They expect to raise the remaining $90 million for each
project or $360 million in total for the four unfunded projects
from financial institutions.
As the two partners are among the biggest names in Asian
business and with sugar prices currently on the rise, financing
is not expected to be a problem. According to the International
Sugar Organization, there will be a global sugar deficit of 2.4
million tons this year --- just over two percent of world
consumption.
Liem is Indonesia's wealthiest Chinese businessman. He has
interests in cement, property, finance and food in Indonesia and
abroad, including Singapore, where he is the biggest shareholder
of listed United Industrial Corp. His companies generate a total
turnover of more than $10 billion, with his PT Indocement Tunggal
Prakarsa being Indonesia's largest listed company.
Hong Kong-based Kuok, known as the "sugar king", is already
one of the biggest sugar players in the world and has extensive
interests in property, shipping and vegetable oils. He is also
the largest shareholder of the up-market Shangri-La group of
hotels.
Investment
Kuok's investment in the Indonesian projects, sources said,
will be through Perlis Plantations Bhd., which is listed on the
Kuala Lumpur Stock Exchange and is one of the largest sugar
producers in Malaysia. A Perlis Plantations spokesman in Kuala
Lumpur declined comment on the grounds that the projects were in
a "preliminary and delicate stage".
According to the 1992 annual report of Perlis Plantations, the
latest available, it currently has no other projects in Indonesia
except for 95 percent owned PT Healthcare Glovindo, which
manufactures rubber gloves. The new investment will be one of its
largest.
The sources said external financing for the Indonesian
projects could be raised in one of two ways. One would be through
direct loans using the plantation land and fixed assets as
collateral. The other would be for the two share-holders to
establish a leasing company that will purchase all the
agricultural and factory machinery and then enter into lease
contracts with the projects.
The leasing company, if established, will be a subsidiary of
the new holding company of Kuok and Liem, and will only service
the requirements of the sugar projects. Funding will largely be
from financial institutions, which will secure their loans with
the machinery and equipment leased to the factories.