Cemex, Rajawali delay closing transaction

The Jakarta Post ,  Jakarta   |  Tue, 07/04/2006 4:54 PM  |  Business

The Jakarta Post, Jakarta

Diversified business group Rajawali failed Monday to wrap up its purchase of most of Mexican-based cement giant Cemex SA's stake in state-owned cement maker PT Semen Gresik (SG).

The delay was due to the fact that the government had yet to conclude its negotiations with Cemex over a number of requirements that had to be satisfied before the former would be willing to give its approval to the sale, Rajawali managing director Daryoto Setiawan said.

""Cemex has given the government until July 10 to finish the negotiations and for us to complete the transaction. Among the issues that have yet to be settled are the termination of the arbitration process,"" he said.

Based on the initial deal between the two firms, the share sale should have been completed by July 3.

After a protracted dispute, the state minister for state enterprises has agreed to the decision by Cemex to sell a 24.9 percent stake -- it currently owns a 25.5 percent stake -- in SG to Rajawali for US$337 million as part of Cemex's exit strategy to end a five-year dispute with the government.

However, the state minister has demanded that Cemex discontinue the ongoing arbitration process, terminate the 1998 conditional sale and purchase agreement (CSPA) between the company and the government, and seek the approval of SG shareholders.

Cemex hauled the government of Indonesia before the International Center for the Settlement of Investment Disputes in Washington D.C. in the U.S. after the government failed to abide by a 1998 investment deal that would have allowed Cemex to gradually become the majority shareholder of SG.

Daryoto said the company was still waiting for the state and Cemex's lawyers to complete their negotiations over the government's demands.

The Cemex-Rajawali deal is subject to the approval of the government as the majority, 51 percent shareholder of SG. The remaining 25.5 percent of the company is owned by Cemex and 23.5 percent by retail investors.

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