Publicly listed ethylene producer PT Barito Pacific won approval Thursday from shareholders to sell US$200 million in bonds to its parent company and use the proceeds to acquire a majority stake in petrochemical producer PT Tri Polyta Indonesia.

The company will sell the three-year bonds to Magna Resources Corp. and may complete the transaction by June 23, director Henky Susanto told reporters after the shareholders meeting.

According to Bloomberg, Barito is 52 percent owned by Magna, which is controlled by Prajogo Pangestu, one of Indonesia's richest men, according to Forbes Magazine.

Vice president for investor relations Agustino Sudjono told The Jakarta Post that the dollar-denominated bond would have three-year maturity with an interest rate of 11 percent payable every six months.

"We need $136.46 million to acquire a 75.95 percent stake, equivalent to 553.23 million shares, in Tri Polyta," he said, adding that Barito had agreed to pay Rp 2,289 for each share at Rp 9,280 per dollar.

Barito will acquire shares from Newport Global Investment Ltd., which owns a 64.65 percent stake in Tri Polyta, and an 11.3 percent stake in Prajogo Pangestu, with the whole process expected to reach completion in September.

"With this acquisition, we're targeting to increase our revenue by up to 30 percent this year. We also hope that with Tri Polyta producing polypropylene, we can at least secure the supply of our raw material as a price in line with soaring oil prices," he said.

Agustino said Barito still imported most of its raw material from the Middle East.

In addition to financing the acquisition, proceeds from the bond issue would also be used to pay loans worth $19.82 million to Bank Mandiri, which has agreed to extend the loan maturity from October 2007 to 2016.

Barito has also set aside $125 million from its internal cash to finance the construction of a butadiene cracker plant near the factory of its petrochemical subsidiary PT Chandra Asri in Cilegon, West Java.

In the first quarter, Barito booked Rp 4.38 trillion in revenue, mostly generated from Chandra Asri, rising significantly from Rp 109.76 billion in the same period last year.

But due to increasingly high production costs, the company suffered a loss of Rp 183.19 billion, increased from the Rp 9.56 billion loss suffered in the previous year.

Last month, the company also closed down temporarily one of its subsidiaries, PT Tunggal Aghatis Indah Wood, in North Maluku and Gorontalo due to high production costs triggered by high oil prices.

Barito has seven subsidiaries, four of which are operating in timber production, two in petrochemicals and one in property.

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