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Government to Off-Load Stakes in Rp 310b Divestment Plan
Faisal Maliki Baskoro | September 06, 2010

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Jakarta. The State-Owned Enterprises Ministry has said it is looking to completely divest the government’s stakes in three ailing small companies and is also planning rights issues for the two biggest state lenders in an attempt to strengthen its capital bases.

According to the ministry, the government is planning to sell its 52.79 percent stake in textile maker Cambrics Primissima, its 48.54 percent stake in paper producer Kertas Padalarang and its 100 percent stake in construction company Sarana Karya.

“The operations of these companies are not optimal due to aging equipment and difficulties in securing financing because the companies keep suffering losses,” SOE Minister Mustafa Abubakar said on Monday while briefing lawmakers from the House of Representatives Commission VI, which oversees state enterprises and trade matters.

“These companies need a partner or an owner who has the proper technology and managerial skills to fix them.”

Cambrics Primissima lost Rp 7 billion ($777,000) in 2007, Rp 8.4 billion in 2008 and Rp 5.5 billion last year. It has forecast profits of Rp 142 million this year.

Kertas Padalarang suffered losses of Rp 4.4 billion in 2007, Rp 18.4 billion in 2008 and Rp 23.1 billion last year, but is expecting a profit of Rp 53 billion this year.

Sarana Karya, which projects a profit of Rp 431 million for last year and a profit of Rp 2.6 billion this year, is nonetheless “not competitive, and its market share is low,” Mustafa explained.

“The aim of privatization is mainly to redevelop the companies through the stock market and to promote good corporate governance, not just simply to add revenue to the state budget,” he said.

According to the SOE Ministry’s secretary, Muhammad Said Didu, the government is expecting to make Rp 310 billion from the divestment.

Meanwhile, the ministry has scheduled rights issues for state lenders Bank Mandiri and Bank Negara Indonesia in order to sell the equivalent of 18.1 percent and 10.13 percent stakes, respectively, in enlarged share capital.

“We’re hoping to have approval from the House by Oct. 5, and to carry out BNI’s rights issue in early December and Mandiri’s by mid-December,” Mustafa said.

With BNI’s share price rising, the minister predicted the issue could amount to Rp 10 trillion, well above the initial Rp 7 trillion target. Some Rp 14 trillion is projected from the Mandiri rights issue, double the initial projection.