Monday, February 27, 2006

Holding for SOE mining companies

Government seems to be serious on establishing a holding company for the state-owned mining enterprises. Three publicly listed-companies, PT Aneka Tambang (Antam) Tbk, PT Timah Tbk, and PT Tambang Batubara Bukit Asam Tbk, will be under the new holding. reported today that the ministry of state-owned enterprises had written to Bapepam (Indonesia's Securities Exchange Commission) on the plan late last month.
The ministry reported earlier to the House of Representative (DPR) that these state-owned mining companies had met with legal, financial, and tax consultants to discuss the plan. The conclusion was the need to establish a holding company.
To implement the plan, the ministry had appointed independent consultants to work out on legal, financial, and capital market aspects. The name of the new holding is tentatively PT Indonesia Resources Company.
Late last year, five groups (Citigroup, BNI Securities-Trans Capita, Rothschild-SMC Silalahi Management Consulting, Danareksa-Boston Consulting-BNP Paribas, and Bahana Securities-Indo Consul) submitted their bids.
As quoted by today, minister for state-owned enterprises Sugiharto said Citicorp, JP Morgan, Sumadipraja & Tale, and MS Tax had been appointed as consultants.
But an executive at JP Morgan denied the report. "We gave the idea of holding, but we're not interested to work on it," he said.
The ministry argues that a holding would boost economic of scale, improve synergy and accelerate the growth. The group would be able to takeover some shares to be divested by big companies like Freeport Indonesia and PT Bumi Resources Tbk.
Antam is strong in prescious metals, Timah in tin production, while Bukit Asam is a coal producer. Initial plan was to merge these companies but dropped for undisclosed reasons.
Antam, Timah, and Bukit Asam booked combined sales of Rp7 trillion (US$750 million) in 9 months 2005 with total profit at Rp1.18 trillion (around US$120 million).
Surprisingly, chairman of Bapepam Darmin Nasution said he didn't know the letter.
Director general of mining at the energy department Simon Sembiring raised the question about the plan saying such holding would only apply if the shareholders are all the same. "How could you establish a holding company if shareholders of the three companies are different," he said.

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