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Krakatau, Garuda, BTN cleared to go public
Legislators have approved the initial public offerings (IPOs) of steelmaker PT Kratakau Steel, flag carrier PT Garuda Indonesia and PT Bank Tabungan Negara (BTN), in a privatization drive that could generate close to Rp 10 trillion (US$1
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Legislators have approved the initial public offerings (IPOs) of steelmaker PT Kratakau Steel, flag carrier PT Garuda Indonesia and PT Bank Tabungan Negara (BTN), in a privatization drive that could generate close to Rp 10 trillion (US$1.06 billion) in capital.
The sales could take place as early as the end of this year, State Minister for State Enterprises Sofjan Djalil said Thursday after a hearing with the House of Representatives' Commission XI overseeing financial affairs.
"The market conditions have to be good (for the IPOs) to get the optimum result. We will not just let go (of the shares)," he said after the hearing, which was also attended by Finance Minister Sri Mulyani Indrawati.
The commission authorized the government to sell a 30 percent stake in Krakatau Steel, the country's largest steelmaker, worth Rp 3.22 trillion ($342.55 million), as early as in the fourth quarter of this year.
The proceeds will be used as part of a total Rp 16.41 trillion earmarked for the company's expansion plan to boost production capacity, to be implemented over the next two to three years.
According to Bloomberg, Indonesia needs about 6 million to 7 million tons of steel products annually. It currently produces 4 million tons.
With the planned IPO and expansion plan, Krakatau is projecting revenue to increase from an estimated Rp 24.6 trillion this year to Rp 33.6 trillion in 2012, and profit to grow from the current Rp 1.5 trillion to Rp 3.1 trillion.
The approval on Thursday ended months of wrangling pitting the government -- which favored a strategic sale over an IPO -- against the legislators.
The commission authorized the sale of 30 percent of BTN, possibly in early 2009.
If the IPO raises between Rp 1.5 trillion and Rp 2 trillion, the bank's revenue is projected to rise from 22.9 trillion this year to Rp 36.3 trillion in 2012, and profit to grow from Rp 472 billion to Rp 1.4 trillion.
The IPO proceeds will be used to fund loans to support the government's affordable housing program, and to strengthen the bank's operations.
The government plans to provide 483,000 houses for low-income people between 2007 and 2009, in cooperation with banks.
Garuda plans to sell 30 percent of its shares, worth Rp 4.2 trillion, in 2009. Of those funds, Rp 2.5 trillion will be used to pay the company's debts and Rp 1.7 trillion to increase the number of planes.
The troubled company needs to settle debts worth a total $836.1 million, Garuda president director Emirsyah Satar said.
Garuda is projecting revenue to increase from Rp 18.9 trillion in 2008 to Rp 59.4 trillion in 2012, and profit to grow from Rp 589 billion to Rp 2.6 trillion.
Commission XI authorized Garuda to issue a maximum 40 percent of shares.
