Minister says govt to buy SG shares

The Jakarta Post ,  Jakarta   |  Tue, 05/23/2006 1:15 PM  |  Business

Rendi Akhmad Witular, The Jakarta Post, Jakarta

The state minister for state enterprises finally confirmed Monday that the government had decided to purchase Cemex SA's shares in PT Semen Gresik (SG), turning down an earlier bid by Rajawali Group.

State Minister Sugiharto said the government had sent a letter to the Mexican cement company notifying it of the decision.

""We are forming a consortium to exercise our right (to buy the Cemex stakes) so that we can meet the demands from local administrations to be given stakes in Semen Gresik,"" Sugiharto told reporters.

He refused to name the members of the consortium, saying only that they consisted of state-owned and regional administration-owned companies.

A source at the ministry has said the consortium consists of insurance firm PT Taspen, social security provider PT Jamsostek, investment firm PT Danareksa, and a number of regional-owned firms, such as PT Andalas Tuah Sakato -- owned by the West Sumatra government -- and PT Wira Jatim -- controlled by the East Java administration.

The East Java-based SG has a subsidiary in West Sumatra -- PT Semen Padang -- and in South Sulawesi -- PT Semen Tonasa.

However, Sugiharto said that the acceptance of the new investors was subject to Cemex approval, which was expected to be forthcoming by the end of this week.

Should Cemex refuse to accept the government's decision, it would force the two sides to seek other investors -- signaling another setback to the settlement of the five-year dispute between the government and Cemex.

""The willing seller (Cemex) will decide whether they agree or not. But I think there is no reason for Cemex to reject our offer as it is based on the same price offered by Rajawali,"" said Sugiharto.

He reiterated that Rajawali had not make its offer directly to Cemex but rather did so through its special-purpose vehicle, Blue Valley Ltd, which is based in Singapore and consist of several foreign companies.

Cemex recently signed a deal with Rajawali, controlled by tycoon Peter Sondakh, to sell a 24.9 percent stake in SG for US$337 million. But the transaction is subject to government approval as the government is the majority 51 percent owner of SG, the country's largest cement maker.

The world's third largest cement maker wants to sell the SG stake in a bid to end its dispute with the government, which failed to abide by an investment deal made in 1998 to allow Cemex to gradually become the majority shareholder in the publicly-listed SG. Cemex has hauled the government before an international arbitration panel, seeking damages of up to US$500 million. A deal to allow Cemex unload its shares in Semen Gresik is seen as being the key to end the arbitration case.

Sugiharto said that should Cemex accept the government's offer, the government would make payment within 30 days.

A source at the State Ministry of State Enterprises said that should the government manage to secure the stake through the consortium, it would eventually allocate 5 percent of the purchased shares to the local administrations in West Sumatra, East Java and South Sulawesi.

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