Two state firms ready for public offering

Two state firms ready for public offering

JAKARTA (JP): Two of 12 state companies are set to float their
shares to the public through the capital market this year amid
the current bearish market, a senior official said.

Director General of State-owned Companies Bacelius Ruru said
the two state companies were ready to launch their initial public
offerings (IPO).

"Actually one or two state companies are ready for IPOs this
year," Ruru said at the House of Representatives yesterday after
Minister of Finance Mar'ie Muhammad presented the revised draft
state budget for fiscal 1998/1999.

Ruru declined to mention the firms.

Indonesia announced Thursday last week that 12 state companies
would be ready for IPOs this year as part of economic reforms
agreed with the International Monetary Fund (IMF) in exchange for
the US$43 billion bailout package for Indonesia.

"In all of these cases, the government intends to go beyond
the recent pattern of seeking minority shareholders in public
enterprises by selling controlling or even complete stakes to the
private sector," the government said in a statement.

However, Ruru said his office had a lot of things to do prior
to listing the companies in the local market.

"There are a lot of things to do and we are working on it
right now," he said.

Previous reports said state companies which had expressed
interest to go ahead with their IPOs were PT Perusahaan Listrik
Negara (PLN), toll-road operator PT Jasa Marga, port operator PT
Pelabuhan Indonesia (Pelindo), steelmaker PT Krakatau Steel and
PT Elnusa, a subsidiary of state company PT Pertamina.

PT PLN recorded a net profit of Rp 301.7 billion in 1997 from
Rp 1.07 trillion in 1996 and it projected a record loss of up to
Rp 1.31 trillion in 1998 due to its mounting offshore debt
resulting from the rupiah's sharp depreciation against the U.S.
dollar.

PT Elnusa is expected to offer about 200 million shares to the
public and raise Rp 300 billion.

PT Elnusa, a joint venture between Pertamina and PT Tridaya
Esta, a minority shareholder in the company currently owned by
businessmen Bambang Trihatmodjo, the second son of President
Soeharto, and Indra Bambang Utoyo, deals with telecommunications
services.

PT Krakatau Steel is expected to offer between 30 percent and
40 percent of its total enlarged capital to the public to raise
about $600 million and PT Pelindo Dua is expected to raise about
Rp 2 trillion from the public.

Commenting on the plans, most analysts said only companies
with dollar earnings would be able to survive the monetary
crisis.

But Laksono Widodo, a senior analyst with ING Barings
Securities, said state companies like PLN or Jasa Marga would be
strongly supported and guaranteed by the government in their
IPOs.

"State companies with good prospects and strong fundamentals
can be successful with the support of the government," he said.

"But share prices during this bearish market will be
discounted," he said.

"The question now is how low the stock prices will be," he
said.

Laksono said even though some global funds were still away
from Indonesia's market, some regional funds were ready to enter
the market, despite being bearish, because stocks were already
cheap.

Bakhtiar Rachman, director of Trimegah Securities, told The
Jakarta Post yesterday that the monetary crisis was the most
critical time for companies in Indonesia including state
enterprises.

"The general view is that there will be fewer companies to
offer shares to the public amid this crisis," he said.

Bakhtiar said seeking fresh funds from the public was the most
viable alternative for companies during tight liquidity
conditions and soaring interest rates in the banking system.

"If they go ahead with their IPO plans, there will be no
companies willing to underwrite them," he said. (aly)