Wednesday, August 08, 2007

Darma Henwa expects to raise $200 million from share offering

Friday, August 03, 2007
The Jakarta Post, Jakarta

Coal mining contractor PT Darma Henwa plans to sell 3.15 billion new shares during the company's initial public offering (IPO) in early September, a senior company executive says.

Speaking during a public briefing Thursday, Darma Henwa's president director Hamdan Handoko said that the shares, accounting for about 30 percent of its enlarged stock, would be offered to the public from Aug. 28 through 30 at a price range of between Rp 290 and Rp 375 per share

"We expect to raise about US$200 million from the public offering," he said, adding that the shares would be listed on the Jakarta Stock Exchange (JSX) on Sept. 6.

PT Danatama Makmur Investment Bank has been chosen as the lead underwriter.

Hamdan said that the company would use 60 percent of the IPO proceeds to finance the capital expenditure on the development of its Bengalon's project, 50 percent to finance its capital expenditure on the Asam Asam project and the remainder to strengthen its working capital.

Chief commissioner Rini M. Soemarmo said the company had recently signed contracts worth $4.75 billion with PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia for mining work in Bengalon, East Kalimantan, and Asam Asam in South Kalimantan, respectively.

PT Darma Henwa was established in 1991 and marked its debut with a $100 million contract with BHP Minerals for a project in Petangis, South Kalimantan. The company is 85 percent owned by Zurich Assets International Ltd. and 5 percent by PT Indotambang Perkasa.

With its established track record of working with some of the largest mining firms in the world, such as BHP Billiton, INCO, Rio Tinto, Newmont and Freeport, and its participation in the government's "10,000 Megawatts" project, as well as current high coal prices, Steffen Fang, the vice president of Danatama Makmur said he believed that Darma Henwa's IPO would be attractive to both local and foreign investors.

In the first semester of this year, the company's revenues and net income reached $109 million and $2.5 million, respectively. The company expects to book total revenue of $252 million this year, with net profit amounting to $8.5 million.

Hamdan said that revenue was projected to increase to $317 million in 2008 and $335 million in 2009, while net profit was expected to reach $24 million next year and $44 million in 2009. (02)

India and Indonesia promote SME links

Thursday, August 02, 2007
The Jakarta Post, Jakarta

To boost bilateral trade between Indonesia and India, the World Trade Center (WTC) Jakarta is holding an exhibition displaying export-quality products from Indonesia's small and medium enterprises (SME), with the focus being on the Indian market.

The three-day exhibition, titled Indian-Indonesian Trade Fiesta 2007, gathers together exporters, traders and businesspeople from both countries with a view to seeking opportunities for cooperation.

Indian Ambassador to Indonesia Navrekha Sharma said that the event would provide a great boost to the two countries' goal of achieving bilateral trade worth US$10 billion by 2010. This goal was agreed on by President Susilo Bambang Yudhoyono and Indian Prime Minister Manmohan Singh during the former's visit to India in 2005.

"There has been impressive growth in bilateral trade. The total trade between India and Indonesia in 2004 was $3.2 billion, and it rose to $4.798 billion in 2006, which was a jump of 22 percent over the previous year," Sharma said during the opening ceremony for the exhibition Wednesday.

She said that in 2006, India's exports to Indonesia reached $1.4 billion, and Indonesia's exports to India $3.39 billion, with the balance of trade being in favor of Indonesia.

The ambassador said he saw great potential for an SME partnership between India and Indonesia as people to people contacts were increasing and there were major potentials in the fields of tourism, handicrafts, gems and jewelry, furniture, leather goods, cosmetics and textiles.

"With a middle class of more than 300 million, India is a market waiting to be tapped by Indonesian entrepreneurs, who should be eager to sell many value-added products to Indian consumers," said Sharma.

However, she said that there needed to be an appreciable shift in the trade pattern, which remained heavily reliant on raw and unprocessed materials from Indonesia, if the two countries wanted to put their trade on a sustainable path in the long term.

"Garuda Airlines should be more aggressive about exploiting the growing Indian tourist market, which sends millions of tourists to Southeast Asia every year. We send about 400,000 tourists to Malaysia each year, why not to Indonesia, a much bigger country?" asked Sharma.

Besides displaying products such as garments, fashion, leather goods, herbal products, handicrafts and furniture, the event, which is sponsored by global freight forwarder Damco, will also feature seminars on trade and tourism issues, and a short course on how to become an exporter.(02)

BNI sale marks RI's biggest offering

Wednesday, August 01, 2007
The Jakarta Post, Jakarta

Bank Negara Indonesia (BNI) and its controlling stakeholder, the government, have raised Rp 8.1 trillion (some US$885 million) selling 3,95 billion shares in the country's third largest bank via a secondary offering.

The sale, which reduces the government's stake in the bank to 73.3 percent from 99.1 percent, marks the country's biggest stock sale by value.

The government sold its shares in the bank at Rp 2,050 per share, State Minister for State Enterprises Sofyan Djalil told a press conference Tuesday. It had targeted a price range of Rp 2,050 and Rp 2,700 per share.

"We had a good response from investors although there was some disturbance in the market. But, it could be better. If only we had privatized BNI a week ago, the price of the shares would have been higher.

"In theory, we said that the timing was very good but the subprime mortgage situation in the U.S. has affected market appetite," Sofyan said, referring to the recent global market turmoil triggered by a Wall Street selloff.

Still, Sofyan said the stock offering, which attracted investors from Asia, the U.S. and Europe, was successful under the circumstances -- something he said reflected investor confidence in the country's economy, banking sector and BNI's prospects.

"By way of comparison, I think the buyer composition is 50:50 as between local and foreign investors."

The sale, arranged by Bahana Securities and JP Morgan, also raised the level of retail shareholding in BNI from less than 1 percent to 26.7 percent.

Of the total proceeds of this year's first divestment, around half would go into the state coffers, Sofyan said, with the rest being used to strengthen BNI's capital structure.

"The government and BNI will each get their share of the money," he explained.

The government has been selling its stakes in state-owned firms and companies it took over during the financial crisis to help plug the annual budget deficit.

Meanwhile, Bahana president director Ito Warsito acknowledged that the global market turmoil recently had affected the outcome of the BNI sale.

"Since last week, the international markets have fallen by 6 percent on average, and this definitely affected both domestic and foreign investors.

"It is not easy to offer as much as this. Some companies such as Chrysler and some other companies in Germany had to downsize their prices," he said.

BNI's shares plunged Rp 200, or 7.5 percent, to close Tuesday at Rp 2,475. (02)

PLN signs power project contracts

Wednesday, August 08, 2007
The Jakarta Post, Jakarta

After three months of delays due to a lack of government guarantees for the investors, state-owned electricity company PLN finally signed Tuesday contracts with three Chinese consortiums for the construction of three coal-fired power plants.

The signing of the contracts followed Finance Minister Sri Mulyani Indrawati's assurance Monday that the government would fully guarantee the financing of PLN's crash program to provide additional 10,000 megawatts (MW) of power by the end of 2009.

Speaking to reporters after the signing ceremony, Energy and Mineral Resources Minister Purnomo Yusgiantoro said the signing of the contracts meant that 60 percent of the contracts for the the construction of power plants to be built under the crash program had been concluded.

He said that the remaing 40 percent of contracts, mostly for the construction of power plants outside Java, would be signed in September this year.

Under Tuesday's contracts, a Chinese consortium of Shanghai Electric Corp Ltd and Dalle Energy will construct a 945 MW coal-fired power plant in Teluk Naga, Banten, at a cost of US$547.4 million in foreign exchange and Rp 1.89 trillion in local currency (about $207.6 million).

A consortium of Dongfang Electric Corp and Dalle Energy will build a 630 MW coal-fired power plant in Pacitan, East Java at $344.9 million and Rp 1.23 trillion, while a consortium of Shanghai Electric Corp Ltd and Maxima Infrastructure will establish a 1,050 MW coal-fired power plant in Pelabuhan Ratu at $566.9 million and Rp 2,205 trillion, West Java.

In March, PLN signed contracts for five coal-fired power plants, all in Java, with a total capacity of 3,300 MW.

Purnomo said the operation of the new coal-fired power plants would significantly reduce the government subsidy for electricity utilization, reduce dependence on oil-based-fuel and increase the country's electrification rate, which now stood at 56 percent.

"We still have approximately 30 months to finish the crash program. If we can complete it by the end of 2009 it would be an extraordinary effort," he said.

"With 10,000 MW from the crash program, plus 10,000 MW more from independent power producers and also some more from private companies, I believe that in five or six years we can double what we did during the past 62 years of our independence."

Currently, PLN has a total installed capacity of 24,417 MW, or 85.5 percent of the total national power generating capacity. The remainder is provided by independent power producers (3,450 MW), and privately owned companies operating power plants for their own industrial activities (746 MW).

Beside the contracts with the three consortiums, PLN also signed on Tuesday a letter of intent with China National Machinery Industry Corporation (Sinomach), for the construction of Tanjung Awar Awar plant and several long-term contracts with coal miners to supply a total of 5.5 million tons of low-rank coal per year.

A consortium of PT Kasih Industri Indonesia and PT Senamas Energindo Mulia will supply 1.4 million tons of coal per year for Teluk Naga plant, a while consortium of PT Arutmin Indonesia and PT Darma Henwa will provide the plant with 858,000 tons of coal per year.

A consortium of PT Arutmin Indonesia and PT Darma Henwa will provide the Pacitan plant with 950,000 tons per year while PT Titan Mining Energy and PT Bara Mutiara Prima will provide Pelabuhan Ratu plant with 1.4 million and 858,000 tons of coal per year, respectively .

"The government is concerned about the long chain of supply of coal from mining sites to plants. Don't let it happen that when construction is finished, the coal supply is not yet ready," Yusgiantoro told the investors.(02)

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