Rajawali seeks to close SG deal

The Jakarta Post ,  Jakarta   |  Mon, 05/29/2006 1:45 PM  |  Business

Diversified business group Rajawali is seeking to quickly close a recent deal with Cemex SA over the purchase of the latter's shares in PT Semen Gresik.

Cemex signed a deal with Rajawali, founded by tycoon Peter Sondakh, to sell its 24.9 percent stake in state-owned PT Semen Gresik (SG), the nation's largest integrated cement producer, for US$337 million. The divestment is part of Cemex's exit strategy to end a five-year dispute with the government, which has failed to honor a 1998 deal that would gradually allow Cemex to become a majority shareholder in SG.

The Cemex-Rajawali transaction was subject to the approval of the government as the majority shareholder. But as the government then did not exercise its right to purchase the SG stake, the door is now open for Rajawali.

""We will try to meet with Cemex to wrap up the transaction after the company has declared the shares 'free and clear'. Based on the deal, we had 60 days since May 3 to pay out the shares,"" said Rajawali managing director Daryoto Setiawan on Sunday.

He also said the group would meet the government as a majority shareholder in SG and as regulator to make sure there were no more obstacles to securing the stake and in future relations.

The government initially wanted to repurchase the SG stake from the Mexican-based Cemex, but since it had no cash to finance the transaction, State Minister of State Enterprises Sugiharto reportedly set up a consortium of state-owned and provincial-owned enterprises to purchase the stake. This proposal, however, was turned down by Cemex, which argued most of the contents of the proposal were against the 1998 deal.

Deputy to the State Minister for State Enterprises Roes Aryawidjaya recently said the government would not play ""rough"" in its attempt to settle the problem with Cemex, and would prefer to invite Cemex officials to further negotiations.

A source at the Presidential Palace said President Susilo Bambang Yudhoyono was disappointed with the way Sugiharto handled the Cemex affair. The government is still facing a legal threat from Cemex as the latter has not officially withdrawn its case against the government.

Cemex took the government of Indonesia to the International Center for the Settlement of Investment Disputes in Washington D.C. after failing to abide by a 1998 investment deal that would allow Cemex to gradually become the majority shareholder of SG. -- JP

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