Corporate News in Brief - December 2010

INTRACO SECURE CREDIT WORTH US$66.7 MILLION. Publicly traded heavy equipment distributor PT Intraco Penta has secured a loan pledge of Rp 600 billion (US$ 66.7 million from local banks. The fund will be used as capital expenditure for its financing subsidiary PT Intan Baruprana Finance (IBF), Intraco Penta director Fred L. Manibog. The three year loans include US$ 38.1 million from PT Bank Mandiri Tbk and PT Bank Syariah Mandiri respectively to contribute US$ 23.4 million and US$14.7 million; and the rest from Bank Muamalat, BNI Syariah, Bank Danamon and CIMB Niaga. This year, IBF hopes to provide financing service worth Rp1 trillion partly to be covered with loans from the banks, Fred said. Intraco Penta President Petrus Halim said the fund will be used to import heavy equipment, repay debts and strengthen working capital. Petrus also said the company plans rights issue next year to finance acquisition of coal mines

WAL-MART AND LOTTE KEEN ON TAKING CONTROL OF HYPERMART. World retail giants Wal-Mart of him United States, Casino Guichard Perrachon SA of France and Lotte Shopping of South Korea are keen on taking over the Hypermart, the hypermarket unit of Indonesian retail company PT Matahari Putra Prima Tbk. Lotte was said to have made an offer to acquire Hypermart at a price of US$ 700 million to US$ 1 billion. Currently Matahari has 51 hypermarket outlets, 25 supermarket outlets, 53 dispensaries, 90 family recreation centers and 18 international bookstores. In addition the company has strategic alliance to operate 91 department stores in 50 large cities in the country. Its hypermarket business under Hypermart recorded a turnover of Rp8.9 trillion last year. This year the turn over is projected to grow 22%. Hypermart plans to open 80 new outlets until 2015.

NESTLE TO MAKE NEW INVESTMENT OF US$100 MILLION. Global food producing company Nestle plans new investment of US$ 100 million in Indonesia building a new factory in West Java to be operational in 2012. The new investment is an addition to previous investment of US$ 100 million to expand a factory in Kejayan, Pasuruan, and East Java in March. Arshad Chaudry, he president of Nestle Indonesia said in the first phase the factory will produce Milo chocolate malt and Cerelac baby porridge to meet growing market demand. The investment is part of Nestle's long term program in Indonesia, Arshad said. Nestle also plans to build a multi category factory in two phases. The first phase will be construction of production facility for beverage Milo chocolate malt and Cerelac baby porridge. The first phase is to be completed in 2012 to be followed by the second phase in 2013-2015.

CITRA TUBINDO TO DIVEST THREE SUBSIDIARIES. PT Citra Tubindo Tbk will sell its entire shares in three subsidiaries at a total price of US$ 12.62 million as it wants to concentrate more on its core business producing threaded pipes. The three subsidiaries are PT Dwi Sumber Arca Waja which operates in production welded pipes with shares to be sold at a price of US$ 12.20 million, PT Citra Byard operating in the same business with shares to be sold worth US$ 119,954, and PT Citra Tubindo Engineering, operating in rig repair with shares to be sold worth US$ 301,000. Harsono, corporate secretary of Citra Tubindo funds from the share sales will be used to strengthen its working capital. The sales of the three subsidiaries reduce the number of its subsidiaries to 11 units located in Batam, and abroad including Singapore, the Netherlands and he United States. The 11 companies operate in various business areas.

LENOVO TO ENTER CELLULAR PHONE MARKET. China's Lenovo, which has been known more as a computer producer, will start competing in cellular phone market in Indonesia this year. This year the Chinese vendor plans to enter the Indonesian market with 12 models of handset, said Jimmy Lemo, the president of PT Global Selular Network, the local agent for Leonvo. In the first six months of this year GSN plans to launch five models - three QWERTY types and two Candy bar types - with market target of low to middle class consumers, Jimmy said. He said the was not worried about the competition in the market, which has been almost saturated with already 200 million users having been registered in the country of 230 million people. "Lenovo has succeeded in building up its reputation in the computer market, and now we offer Lenovo cellular phone with higher quality," he said.

CARGILL ACQUIRES SORINI AT US$ 300 MILLION. Cargill has acquired 85.01% of PT Sorini Agro Corporindo Tbk from PT AKR Corporindo Tbk and UOB Kay Hian Pte Ltd at a price of Rp 3,500 per share or a total price of US$ 300 million (Rp 2.72 trillion. Sorini is the world's largest producer of sorbitol. From AKR Corporindo, Cargill bought 68.82% stake in Sorini and the rest from UB Kay Hian. Regional director of Cargill Asia Pacific Bram Klaeijsen said Sorini has a good tract record having strong market foothold, strong management. The acquisition will make its mark in the growth of Cargill in food industry in Asia especially in Indonesia, Southeast Asia and the world. AKR President Haryanto Adikoesoemo said his company will focus more on energy business, chemical distribution and logistic infrastructure after the divestment of Sorini.

PERTAMINA SETS ASIDE US$1 BILLION TO ACQUIRE OIL AND GAS BLOCKS. State oil and gas company PT Pertamina will set aside US$ 1 billion for acquisitions of oil and gas blocks this year. Pertamina is set to have an extra production of 100,000 barrels of oil per day in the next four years from acquired oil blocks, its finance director Ferederick Siahaaan said. Pertamina is eyeing oil blocks in Africa, Iraq, Kazakhstan and Libya, Ferederick said, adding the company has 20 oil and gas blocks in its list to be acquired. The company is seeking to reduce its dependence on imports for crude oil to feed its refineries. The company imports around 300,000 barrels of crude oil per day including 80% under contracts and 20% from spot markets. Earlier, Pertamina Hulu Energi (PHE), a subsidiary of PT Pertamina said it will set aside Rp10 trillion (US$1.12 billion) to acquire oil fields in the country and abroad next year. PHE president DWI Martono said the acquisition targets include oil fields in Africa, Saudi Arabia, Iraq and Iran as well as in Indonesia. He said for the time being PHE has no plan to acquire gas field as it still has large gas reserves.

TRIMEX SANDS TO BUILD TITANIUM FACTORY. Trimex Sands plan to build a titanium factory with an investment of US$850 million in Indonesia under an agreement signed recently. The unit of the Indian giant Trimex Group signed the memorandum of understanding with the Indonesian government in New Delhi where President Susilo Bambang Yudhoyono was on a three-day visit. Trimex plans to build an integrated titanium complex with an international standard in three phases for 10 years, a company official said. The first phase of the project will need an investment of around US$200 million to produce titanium dioxide pigment (TiO2), which is widely used by paint, ceramic, paper and plastic producers. The factory will help Indonesia meet its TiO2 requirement, Trimex Group Chairman Prasad Koneru said. The country has been dependent on imports for TiO2, Industry Minister M.S. Hidayat said.

HANKOOK TO BUILD TIRE FACTORY IN INDONESIA. South Korea's tire producer Hankook Tire will implement a US$ 1.1 billion investment plan in Indonesia in the third quarter of this year. In the first phase Hankook will build a US$ 353 million tire factory in Bekasi, West Java with an annual production capacity of 6 million units, Hankook's vice president Hyun Bun Cho said here recently. The factory, to be operational in 2014, will contribute to the company's ambition to produce 100 million units of tire in 2014, Cho said. The second phase will follow in 2015 and the third in 2017 to expand its capacity with a total investment of US$ 1.1 billion, he said. Hankook, now the 7th largest tire maker in the world is set to become the fifth largest after the US$ 1.1 billion project has been fully implemented, he said. The Indonesian unit will serve as a production base not only for ASEAN but also for the world, he said, adding it would be Hankook's largest unit after ones in Hungary and China. Gita Wirjawan, the chairman of the capital investment coordinating board (BKPM) pledged the government would provide fiscal incentive in the form of tax allowance to support the project. Meanwhile, Soo Il Lee, the president of Hankook Tire America Corp said the factory will export 50% of its production to the United States.

DIAN SWASTATIKA ACQUIRES CHEMICAL COMPANY. PT Dian Swastatika Sentosa Tbk has taken over 99.5% of PT Rolimex Kimia Nusamas at a price of Rp63 billion to strengthen its business in trade. L. Krisnan Cahya, the president of PT Dian Swastatika Sentosa said the company will focus on chemical trading business to add to its coal trading business. Dian Swastatika, a publicly traded company is 59.9% owned by PT Sinar Mas Tunggal, of the Sinarmas Group. The company also has other business in other sectors including in power generating plants and base transceiver stations operation and in coal mining Rolimex Kimia Nusamas is an affiliate of the Sinarmas Group operating in chemical trade including fertilizer and pesticide trade.

MANDALA AIRLINE TO RESUME OPERATION. Mandala Airlines said it will resume operation in April after a suspension since January over debt problem. The airline has finalized negotiation with more than two investors ready to provide the necessary fund to revitalize the ailing airline, an airline executive said. More than two foreign and local investors will join as financers or strategic investors, the executive said, declining to give names. Mandala shareholders Cardig International, a 51% owner and Indigo Partner, a 49% shareholder have agreed on an Rp 2.5 trillion (US$ 278 million) debt conversion into shares. Mandala suspended operation after all of its leased aircraft were returned to the lessor over failure to meet debt obligations Earlier the airline said 88% of its creditors agreed to convert its debts into a 15% stake saving it from being succumbed to bankruptcy. The management of the airline said the decision of the majority of the creditors gave it way to bring in new investors to prop up the airline. Hong Kong based LCNC Holding Indo Group is said to be the likeliest investor to take over ailing Mandala Airlines. Air transport director general Herry Bakti Singayuda Gumay said LCNC as a lessor could immediately provide aircraft for Mandala to meet the regulation. A new Indonesian regulation requires an airline to operate at least 10 aircraft and own at least 5 of them by January next year.