PT Krakatau Steel, the country's largest steel maker, is set for the House of Representatives to choose either a strategic sale or an Initial Public Offering (IPO) to conduct its privatization.
"We're working very hard right now to be ready for anything. We're currently re-evaluating our assets, being diligent and sending reports to the capital market supervisory agency and financial institution," Taufiequrachman Ruki, chief commissioner of Krakatau Steel, said Monday.
The government's plan to privatize the company, which has a production capacity of 2.5 million tons, has been embroiled in controversy.
State Minister for State Enterprises Sofyan Djalil has said a strategic sale would be most beneficial to meet rising domestic demand for the commodity, which is expected to rise to between 8 million and 10 million tons per year by 2012.
The current domestic demand for steel stands at 6 million tons, 2 million tons of which are imported.
So far, five global steel giants have stated their interest in gaining a stake in Krakatau Steel, including the world's largest steel producer, ArcelorMittal of India, which has a maximum annual steel production capacity of 120 million tons.
However, the proposal of a strategic sale, where the company would be sold in chunks to selected investors, has met opposition from Krakatau Steel's management and labor unions, which prefer an IPO.
Sofyan recently said an IPO would be more politically viable, though not economically advantageous.
"The debate is no longer about substance but about politics... so I urge the House to make a decision as soon as possible. And if it's an IPO, I challenge the company to have one by September," Sofyan said.
Krakatau Steel president Fazwar Bujang said it would be hard for the company to have an IPO in September.
"If we speed up the process, we might be able to have one by October, but we'll definitely have one sometime in the fourth quarter of this year," Fazwar said, adding that CIMB-GK Securities had been appointed as a financial advisor.
Fazwar said Krakatau Steel was ready to relinquish 20 percent of its shares.
"The size could be revised downwards or upwards, depending on the result of the audit and the re-evaluation of our assets," he said, adding that the company aimed to gain Rp 2.5 trillion (US$268.4 billion) from the IPO.
"But that all depends on the House's decision of course."
House Commission VI on Trade, Industry and State Enterprises was deliberating Monday night on the decision, although no decision has yet been made. (anw)
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