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GARUDA SEEKS TO BUY AIRLINES FACING FINANCIAL PROBLEM. Garuda Indonesia hopes to strengthen its domination of air transport business in the country by acquiring local airlines facing financial problems. A Garuda director Elisa Lumbantoruan said the state company had been in talks with a number of private airlines including Linus Airways, which has been grounded on financial problem.   Elisa said  under  the new aviation law , which is aimed at creating healthy airline industry in the country,  a number of airlines may be forced  to stop  operation  on financial problem such as Linus Air and Star Air   Garuda wants to strengthen its capacity facing the era of globalization  especially free trade area in ASEAN, she was quoted as saying.  A foreign airline had also indicated interest in acquiring Linus Air which has stopped operation since April, 2009.  Linus President Julius Indra said. Later, however, Garuda President Emirsyah Satar said the plan to acquire Linus and Star Air were cancelled as the Transport Ministry already revoked the licenses of the two airlines on June 26. Satar said the revocation of the operation license would also mean cancellation of their route licenses.  Garuda would gain nothing by continuing the plan, he said.

SEBUKIT TO BUILD PEAT FUELED POWER PLANT WITH AN INVESTMENT OF US$400 MILLION.  PT Sebukit Power plans to build a steam powered electric generating plant fueled with peat with an investment of US$400 million . The 3x36 megawatt power plant will be built in Mempawah, West Kalimantan, Marcelius Kurniawan, the company president  said. Kurniawan said the project is integrated with peat mining as fuel and land reclamation. In building the project, PT Sebukit Power will cooperate with VP Korean Electric Power Corporation (Kepco)  and  Korean Southern Power Ltd (Kospo). The power plant is to be operational in 2012  and its power output will be supplied to the system of the state eletcricity company PLN. PT Sebukit Power is a joint venture  between Insfoil Venture Pte Ltd (IPV) and  PT Sebukit Energy (SE). It will operate the power plant under a 30-year contract. A power sales agreement  was already signed  on 18 September 2008 with PLN for 30 years  with a price of 4.775 US cents  per kWh.

ICON+ SET TO FINISH CONSTRUCTION OF FIBER OPTIC TELECOMMUNICATION SYSTEM IN THIS YEAR. PT Indonesia Commets Plus (ICON+), a subsidiary of state electricity company PLN said it is optimistic its project of fiber optic telecommunications system extending from Sumatra to Lombok through Java and Bali, will be completed in October, 2009.  The project is estimated to cost Rp375 billion. The system will serve not only PLN but also industries, banks  and other consumers. ICON+ President Mulyo Adji said the part of  the system in Java-Bali was already  built before  2000. The system would be extended to Sumatra  in the western end and to  Lombok in the eastern end to expand the internet network of the company. The implementation of the project  would be ahead of the Palapa Ring project,  fiber optic telecommunication network planned by the government. ICON+ is a  telecommunication  and information service company utilizing the facility of PLN including main electricity relay stations. Among the subscribers of ICON+ include PT Telkom (Persero), Indosat, Telkomsel, Lintasarta, CSM, Bank Mandiri, Bank Rakyat Indonesia (BRI) and  Medco.

HEIDELBERG MAINTAINS CONTROL OF INDOCEMENT. German cement giant HeidelbergCement AG raised Rp3.12 trillion (US$312 million) from the sales of 14.1% stake it has in PT Indocement Tunggal Prakarsa.   Indocement corporate secretary Dani Handayani said Heidelberg needed fund to repay a debt.  Dani said after the divestment, Heidelberg's share in Indocement was reduced to 51% with the Salim Group holding 13.03% and the new investors and the public holding the rest. She said the identity of the stake buyers remain unclear as Heidelberg only said the state had been sold to international institutional investors.  Anthony Salim of the Salim Group earlier said it was considering buying the Heidelberg stake. Royal Bank of Scotland Group Plc (RBS) Hongkong helped in  the process of  the share sales by involving ABN Amro Asia Securities Indonesia  to carry out the transaction in the Indoensian Stock Exchange. Bernd Scheifele, Chairman of HiedelbergCement Managing Board,  said the fund from the share sales would be used  to repay the debt of the parent company. Before the sales, Hiedelberg through its subsidiary Birchwood Omnia Limited in Britain owned 65.14%  or 2.39  billion of the shares of Indocement. Other shareholders incldue PT Mekar Perkasa of he Dalim Group (13.03%), and investing public 21.83%. Indocement  is the country's second largest cement producer  with a production capacity of 17.1 million tons a year  with factories in Citeureup, Bogor and  Tarjun, West Kalimantan .

GARDA TUJUH TO ACQUIRE TWO COAL MINES. Coal producing company PT Garda Tujuh Buana said it hopes to acquire two coal mines in East Kalimantan this year Garda President Hari Purnomo said  the two mines are expected to increase the company's coal production  to 905,000 tons  from only 30,000 tons last year. Each of the mines has a reserve of around 50 million tons, Hari said refusing to name the owners of the mine and say the prices.  The company plans to launch   initial public offering later this month to raise fund to help finance the acquisition. The company holds a mining concession of 710 hectares in  Pulau Bunyu, East Kalimantan producing coal  of 4,471 - 4,851 kilo calorie. The company is processing the IPO plan . Part of the  fund from the IPO will be used to buy mining machines , to build  mining facilities  and infrastructure  and for land clearing . The other part will be used to strengthen its working capital.

BOSOWA GROUP THE STANDBY BUYER FOR RIGHT SHARES OF BANK KESAWAN. The Bosowa Group through its subsidiary PT Malomo Transportindo has agreed to become a standby buyer for rights shares to be offered by PT Bank Kesawan. The publicly traded bank plans to launch right issue selling 20% of its right shares worth around Rp40 billion (US$4 million) expected this month.   Bank Kesawan President Dinno Indiano said Malomo is a potential shareholder of the bank if its majority shareholder PT Adhi Tirta Mustika refuses to buy the shares.    Adhi Tirta will have its 63.03% share diluted to 51% if Malomo buys the entire shares offered in the rights issue. Meanwhile, the chief executive officer of the Bosowa Group Erwin Aksa said if Malomo as the  standby buyer  acquires 125.3 million units of the new sharesd to be issued by shares Bank Kesawan, it would be a 20% shareholder of the bank  with Adhi Tirta remaining in control of 51.2% of the bank  and Kapita Sekurindo holding  6.5%  and the public  22.2%.

BAT TO HOLD TENDER OFFER FOR BENTOEL SHARES. British American Tobacco Limited said it will launch tender offer for 14.87% of the shares of PT Bentoel Internasional Investama between July 21 - August 19.  BAT is required to hold tender offer after it acquired the majority stake of 85.13% in the country's fourth largest cigarette maker recently.  BAT acquired the stake or 5.73 billion shares in June at a price of Rp873 per share.  BAT l has set aside Rp874.33 billion to buy the 14.87% stake held by investing public; the company management told the Indonesian Stock Exchange in a report. The company has named PT Deutsche Securities Indonesia and PT UBS Securities Indonesia to handle the tender offer. The world's second largest cigarette producer will buy the shares at Rp874 each the same price it paid to Bentoel's former owners including the Rajawali Group for the 85.13% stake. The Rajawali group sold its 56.96% stake at a price of Rp 3.35 triliun. Based on its financial report in March 2009,  the shareholders of Bentoel included Bella Spphire Ventures Ltd  (41.73%), Blue Eagle Ltd (14.48%) , Citibank NA (9.66%),  and investing public (34.13%).  The managing director of the Rajawali Group,  Darjoto Setyawan, said the company will invest the fund in its core business including property,  plantaiton and mining sectors.

BAKRIE PLANTATIONS DOUBLES CAPITAL EXPENDITURE. PT Bakrie Sumatera Plantations has decided to double its capital expenditures to Rp250 billion (US$25 million) this year from Rp125 billion set previously. The company needs more fund for replanting in 2,700 hectares of oil palm plantations in West Sumatra and North Sumatra, its President Ambono Januarianto said. The company also plans to build a palm oil processing factory in Central Kalimantan, Ambono said.   A company director Howard James Sargeant said planting will cover 7,000 hectares of oil palm plantations this year and 8,000 hectares next year. Last year, the company posted Rp2.93 trillion in sales with net profit at Rp173.57 billion. Meanwhile, the company plans to spend US$ 8 million in a project to set up a  Bakrie Agro Research Institute (BARI)   to grow oil palm seedlings . Sargeant  said the company has imported  high yield seeds from ASD de Costa Rica S.A.,  in Costa Rica, Central America. The company also cooperates with ASD  in a joint venture company  named Bakrie Seed Garden (BSG)  to develop seed gardens , which is expected to start production in 2011. The nursery is aimed at producing high yield seedlings  to grow oil palm trees that could turn out 40 tons of fresh fruit bunches  per hectare  with a grade of 25%  or 10 tons of palm oil a hectare.

MALINDO TO BUILD A NEW ANIMAL FEED FACTORY.  PT Malindo Feedmill said it is building   an animal feed factory at a cost of Rp100 billion (US$10 million) in Banten.    Malindo commissioner Tan Lai Kai said construction of the factory over a 5.4 hectare plot of land in Cikande, Serang, will take a year.  The company will use part of Rp300 billion its raised from the sale of bonds last year to finance the project, Tan said. He said the company  also wants to acquire  poultry farms this year .The factory will have a production capacity of 30,000 tons of feed a month  or 360,000 tons a year. The new factory will increase its total production capacity to 450,000 tons a year. Tan predicted a 10-15% increase in demand for animal feed this year with the improving economic condition.

GLOBAL MEDAICOM TO INVEST Rp500 BILLION IN TV NETWORKS. PT Global Mediacom Tbk plans to invest Rp400 billion - Rp500 billion to expand business to local television networks including through acquisition.  The company will divest its 19% stake in cellular phone operator PT Mobile-8 Telecom Tbk to strategic investors to focus on advertisement and subscription based media service business. Global Mediacom chief executive officer Bambang Harry Tanoesudibyo  said this year the company is set to have 10 units of local TV stations in the regions. Last year, Global Mediacom reported an income of Rp5.38 trillion with advertisement and content-based media business contributing Rp3.78 trillion and subscription-based media business  contributing Rp776 billion and  informaiton technology Rp828 billion and other income Rp0.9 billion. The more promising business in the two sectors has prompted the company to sell its stake in Mobile-8.

PERTAMINA TAKES OVER 46% STAKE IN ONWJ BLOCK. State oil and gas company PT Pertamina finally was declared winner of a tender to acquire 46% stake worth S$280 million in Offshore North West Java Block (ONWJ) block from Beyond Petroleum West Java Ltd   PT Pertamina will wholly take over the role of BP in the block both as a shareholder and as the operator, Pertamina President Karen Agustiawan said after the signing of the sales and purchase agreement in June.   Karen said the stake in ONWJ will increase Pertamina's daily production by 12,000 barrels of crude oil and 100 million cubic feet of gas per day. She said the acquisition is part of the company's move to strengthening its upstream business especially in offshore operation. Pertamina is eyeing not only the asset but  also seeking  to improve its skill in handling upstream sector of the industry  Pertamina win the tender defeating  other bidders including PT Medco Internasional Tbk, China National Petroleum Corporatin  and  PT Energi Mega Persada Tbk  and Supreme Energy. The  ONWJ has  314 production wells  and 218  offshore structures now producing 22,000 barrels of oil per day l and 220 MMscfd of gas .


MONTHLY REPORT
INDONESIAN COMMERCIAL NEWSLETTER (ICN)
 
CORPORATE NEWS IN BRIEF
June 2009
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