Corporate news - September 2008

Corporate News In Brief

September 2008

ASTRA EYEING FIVE COAL MINING COMPANIES TO BE ACQUIRED IN 5 YEARS. After failing to acquire coal mining PT Bayan Resources Tbk, PT Astra International Tbk is eyeing 5 other coal mining companies each with a coal reserve of 100 million tons to be acquired in the next 5 years. A Senior Vice President of Astra International said the acquisition will be mad by its heavy equipment subsidiary PT United Tractors (UT), which already expanded business to coal mining. The acquisition will be finance with 55% of fund raised from the rights issue by United Tractors. The shareholders have agreed to support if the fund from the right issue is not enough. The five coal mining companies do no include one to be acquired soon by UT.

SEMEN PADANG TO BUILD $440 MLN CEMENT PLANT. PT Semen Padang, a subsidiary of state-owned Semen Gresik Group plans to build a new cement factory with a capacity of 2.5 million tons a year with an investment of up to US$440 million early next year. The new factory is needed as the existing units have all operated at full capacity. The new factory will increase the production capacity of PT Semen Padang to 8.3 million tons. This year, the company already optimized its installed capacity from 5.24 million tons to 5.8 million tons. The new unit is to replace the old Indarung I, which has stopped operation since 1999. In order to support the plan, the company has expanded its lime stone mining operation to 412 hectares in the village of Indarung, Kecamatan Lubuk Kilangan, Padang. The lime stone reserve of that area is estimated to be enough to supply the basic material for Semen Padang for 70 years.

ELNUSA SET TO EXPAND BUSINESS TO OFFSHORE OIL EXPLORATIONS. PT Elnusa said it will spend Rp552 billion (US$60 million) to buy seabed oil reserve detection equipment to support its bid to expand business to offshore oil explorations. Elnusa, an exploration subsidiary of state oil and gas company PT Pertamina plans to buy the 10-line streamers next year to diversify business to deep sea seismic explorations, company secretary Heru Samodra said. The company hopes to secure bank loans to help finance the purchase, Heru said, adding talks have been held with a number of local and foreign banks. He said Elnusa will cooperate starting end of this year with Bergen Oilfield Service of Norway in the deep sea exploration business. The two companies will establish a joint venture in 2010 to operate in deep sea explorations in the Asia Pacific region with share split of 50% each. Elnusa also plans invest in land seismic explorations for which it has secured an export credit of US$2.2 million from Natixis, French bank, to buy seismic exploration equipment from Sercel in France.

JBIC TO FINANCE DEVELOPMENT OF TAYAN BAUXITE RESERVE. Publicly listed mining company PT Aneka Tambang (Antam) is finalizing a credit deal of US$352 million (Rp3.02 trillion) with the Japan bank for International Cooperation (JBIC). The loan, signed late 2007, will be used to finance the construction of a US$500 million chemical grade alumna project in Tayan, West Kalimantan. The remaining US$175 million of the cost will be in equity to be put up by Antam and its joint venture partners, its President Alwin Syah Loebis said. Antam, which will have a 65% stake in the venture has signed a joint venture agreement with Showa Denko KK Japan, Marubeni Corp of Japan and Straits Trading Amalgamated Resources Private Limited of Singapore Tayan is estimated to have a reserve of 100 million tons of bauxite and the plant is expected to be able to turn out 300,000 tons of chemical grade alumna a year when it stats operation in 2010.

BINTANG MITRA TO WHOLLY TAKE OVER REGIS ENERGI. Publicly traded property company PT Bintang Mitra Semestaraya plans to wholly acquire PT Regis Energi Indonesia at a price of Rp521.65 billion (US$56.5 million) to start business in the energy sector. Regis is an investment company having a number of subsidiaries all operating in the oil and gas sector. Bintang Mitra President Suhsih Boentoro said he hopes the acquisition will be concluded in two months after its shareholders gave the go ahead. The company has been in difficulty to expand business in the property sector with the rising prices of land and shrinking land bank owned by its subsidiaries operating in the property sector. Bintang Mitra is a parent company for a number of subsidiaries operating in the property sector such as PT Ristia Bintang MahkotasejatiTbk and PT Royal Oak Development Asia Tbk. Bintang Mitra will finance the acquisition with fund to be raised from the sales of subsidiaries and right issue.

SEBUKIT POWER TO BUILD PEAT FUELLED POWER PLANT IN WEST KALIMANTAN. PT Sebukit Power said it will build a peat fuelled power plant with an investment of US$400 million in Pontianak, West Kalimantan. Construction of the power project consisting of three units each with a capacity of 67 megawatts will started next year, company President Marcellius Kurniawan said. The first units is expected to come on stream in 2011 to be follow with the second units in 2012 and the third unit in 2013, he added. The fund including 70% in loan from The Export Credit Agency (ECA) and 30% in equity will be used to finance engineering procurement and construction ruction and infrastructure to process peat, he said. State electricity company PLN has agreed to be the off take. Construction of the first unit of the project is expected to be completed in 2009, but operation is to start in 2011. The project will use the European technology.

BAKRIE FINISHES 80% OF CONSTRUCTION OF SLI INFRASTRUCTURE. PT Bakrie Telecom said it has finished 80% of the construction of infrastructure for international direct dial (SLI) and the service will be launched by the end of this year. Director of Corporate Services Rakhmat Junaidi said the service will be available not only for Bakrie Telecom but also for other operators as interconnections will be established for international calls between all operators. Bakrie Telecom also plans to finish the development of submarine cable communication systems for SLI service by the end of this year and has studied cooperation with five international operators of SLI such as Telstar. Bakrie Telecom will be the third operator of SLI service in the country after Indosat and Telkom the construction of the infrastructure passes the operation test by the Post and Telecommunications Directorate General.

ASTRA INCREASES STAKE IN UNITED TRACTORS. Widely diversified corporation PT Astra International has increased its stake in heavy equipment subsidiary PT United Tractors to 58.54% from 58.45%. Astra spent Rp2.1 trillion (US$228 million) to buy 280.73 million units of new shares issued by United Tractors in the rights issue for which the parent company is the standby buyer, Investor relation officer of United Ari Setiyawan said. Ari said Astra could increase its control of United as some shareholders of the heavy equipment distributor did not use their rights to buy the new shares. He said United will use part of the fund from the share sales to repay a debt in loan it used to acquire a coal mining company PT Tuah Turangga recently

TELKOM TO BUILD NEW SATELLITE. The country's largest telecommunications company PT Telkom said it will build a new communications satellite to cost around Rp1.86 trillion (US$200 million). The new satellite Telkom-3 will have 48 transponders, up from 24 originally planned, its President Rinaldi Firmansyah said, adding the fund includes cost of launching. Rinaldi said the state company is preparing tender with bidders from the United States and Europe to build the satellite expected to be launched in 2011. He said part or 30%-40% of the transponders will be for lease and the rest for use by the company. Telkom already launched satellites earlier - Telkom-1 and Telkom-2 each with 24 transponders with a life span of 15 years. Telkom-2 was launched in 2005.

MAYBANK TO CLOSE BII DEAL. Malayan Banking Berhad (Maybank) said it would close the deal to acquire 56.13% of PT Bank Internasional Indonesia Tbk (BII) at a price of US$2.7 billion. Maybank finally decided to acquire the stake from Sorak Financial Holdings Pte Ltd, which is a consortium between Fullerton Financial Holdings Pte Ltd and Kookmin Bank, the largest bank in South Korea. Fullerton is a unit of Temasek, an investment holding of Singapore. President of BII Henry Ho Hon Cheong said Fullerton, Kookmin and Maybank had agreed to complete the process of taking over Sorak on 26 September 2008. Maybank will also need to provide US$1.2 billion to buy shares form investing public.

PERTAMINA'S OIL OUTPUT OFF TARGET. Crude oil production of PT Pertamina EP, a subsidiary of state-owned oil and gas company PT Pertamina, fell short of target in the first half this year but exceeded production in the same period last year. Crude oil production of the company totaled 119,000 barrels per day as against the target of 128,000 bpd set by the upstream oil and gas regulatory agency (BP Migas). The daily production in the same period last year totaled only 109,000 barrels. Pertamina E&P President Tri Siwindono doubted the company could reach the target set by BP Migas this year, saying the highest level of daily production is around 123,000 barrels per day. He said Pertamina planned to spend Rp6.4 trillion in investment in the upstream sector but realization so far is only 24% of the amount. Earlier Pertamina said it wants to have a stake of at least 10% in the Makassar Strait Block, which will have a production capacity of up to 800 million cubic feet of gas a per day. Pertamina Vice President Iin Arifin Takhyan said the company will uses its right to have at least a 10% stake as arranged in the production sharing contract of Chevron Indonesia Company, which operates the block. .

KRAKATAU STEEL REJECTS MOVE BY MITTAL TO ESTABLISH JOINT VENTURE. State-owned steel maker PT Krakatau Steel rejected move by world's largest steel producer Arcelor Mittal to cooperate in building an integrated steel mill in Banten. The management of KS even advised Arcelor Mittal to build its own factory and compete fairly in the country steel industry. Earlier chief of the investment coordinating board (BKPM) Muhammad Lutfi said Mittal planned to invest around US$6 billion to build two steel factories - in Pasuruan, East Java and Banten. Lutfi said Mittal already bought 100 hectares of land in Pasuruan for the factory and is looking for a suitable location in Banten. Earlier the management of KS rejected attempt by Mittal to acquire a stake in the country's largest steel maker. KS President Fazwar Bujang said KS already had its own master plan and the master plan is not to be changed because of a joint venture proposed by Mittal. Involvement of Mittal through joint venture will only affect implementation of master plan including planned initial public offering (IPO), he said. Mittal will gain from the production facilities already built by KS if KS accepts the proposed cooperation, he added.

BOSOWA SECURES A LOAN OF RP600 BILLION from TAELS. Bosowa Corporation, a widely diverified corporaiton owned by Aksa Mahmud has secured a loan of Rp600 billion from Tael Management Ltd, Cayman Island. Bosowa will use the fund to repay its debt to state-owned banks - Bank Mandiri and BNI. Bosowa earlier promised to settle the long overdue debts which carries commercial interest rate to the two state banks in January at the lastest, but apparently it failed until now. Its debt to BNI amounts to Rp170 billion and to Bank Mandiri around Rp 430 billion. Bosowa Corporation is one of the largest conglomerates in eastern Indonesia. Currently the Bosowa Group has at least 26 subsidiaries opersaitng in various business areas including cement and automotive industries, infrastructure, printing media and real estate sectors.