Two foreign firms bid for Bakrie's stake in Arutmin

JAKARTA (JP): PT Bakrie & Brothers is set to sell its shares in coal mining company PT Arutmin Indonesia in the second quarter of this year, the company's president said yesterday.

PT Bakrie & Brothers president Tanri Abeng said there had been two overseas bids including one from Japan.

PT Arutmin Indonesia, 20 percent owned by Bakrie & Brothers and 80 percent by Australia's Broken Hill Proprietary Ltd, is in West Kalimantan.

Tanri Abeng said Bakrie & Brothers's investment in Arutmin was worth $40 million and it expected to sell its stake for between US$40 and $50 million.

"The total transaction value must be over Rp 118 billion," he said.

He said the aim of selling the company's stake in PT Arutmin Indonesia was to get fresh money to finance the company's expansion. "We need cash for the expansion of our core business," he said, adding that mining was not one of the company's core businesses.

The company's core businesses are telecommunications, infrastructure and plantation business.

PT Bakrie & Brothers plans to invest about Rp 900 billion this year in its core business. It will spend Rp 450 billion for telecommunications, Rp 370 billion for infrastructure and Rp 80 billion for plantation business.

He said coal mining was a long term business so one could not expect to have dividends in the short run.

Tanri said in PT Arutmin Indonesia's case the company might be able to pay dividends in 2000.

"Though coal mining provides a bright business prospect for the company. It will take a long time to get dividends from the coal mining firm," he said

This was why Bakrie & Brothers had to sell its stake to get fresh cash. "We need cash right now while the company could not provide it for us," he said.

Asked if the timber tycoon Mohammad (Bob) Hasan of Nusamba Group and Jusuf Merukh had expressed interest buying Bakrie & Brothers' stake in Arutmin, Tanri said: "We were told not to mention names," he said.

But Bakrie & Brothers did plan to expand its business into other noncore businesses, namely the petrochemical and power businesses, he said.

He said the power and petrochemical industries had a stable future. "The power business is like telecommunications," he said.

Bakrie & Brothers recently sold its 49 percent stake (10.5 million shares) in PT Indocopper Investama Corporation (IIC), which owns 9.6 percent of PT Freeport Indonesia, to the politically well-connected Nusamba.

The business group, 80 percent owned by three foundations chaired by President Soeharto, 10 percent by Bob Hasan and 10 percent by the President's eldest son Sigit Hardjojudanto, recently closed a deal to buy 50 percent of PT Askatindo Mineral Karya, Bre-X's local partner in the disputed Busang gold mine in East Kalimantan.

The transaction was worth Rp 724.24 billion (US$302.7 million). (09)