[Kabar-indonesia] 2 Cemex-Rajawali Updates: Pact Ends Battle to Control Asian Cement Maker

[JoyoNews at aol.com]

also: Bloomberg: Cemex agrees to sell US$337m stake in Semen Gresik 

Dow Jones Newswires
Tuesday, July 25, 2006

Cemex to Sell Semen Gresik Stake

Mexican Firm's Pact Ends Battle 
to Control Asian Cement Maker

By EDHI PRANASIDHI and LINDA SILAEN

JAKARTA, Indonesia -- Cemex SA of Mexico signed an agreement yesterday to 
sell most of its stake in PT Semen Gresik to a local conglomerate, formally 
ending the Mexican company's contentious eight-year battle for control of 
Indonesia's largest cement producer.

Under the terms of the agreement, Cemex will sell 24.9% in Semen Gresik to 
closely held Rajawali Corp. for $337 million. The deal leaves Cemex with a 
minimal 0.63% stake in Gresik, and also leaves the Indonesian government in 
undisputed control with a 51.01% stake.

Said Didu, the secretary of the Ministry for State Enterprises, said the 
government intends to maintain its controlling stake. He added that the signing of 
the deal indicates Cemex no longer intends to pursue an international 
arbitration case against the government over the ownership of Gresik.

A Cemex spokeswoman declined to comment.

In 1998, Cemex bought a 25.53% stake in Gresik from the Indonesian government 
for $290 million, with an agreement to increase its stake to 51% by the end 
of 2001.

However, the government never allowed the Mexican firm to take control of 
Gresik in the face of lobbying and threats of social unrest by workers and local 
politicians. The dispute marked a low point in Indonesia's relationship with 
foreign investors.

After years of being thwarted in its effort to complete the deal, Cemex in 
2003 filed a request with the International Center for the Settlement of 
Investment Disputes, a Washington D.C.-based affiliate of the World Bank, to act as 
an arbiter with the Indonesian government.

Rajawali's acquisition of the Semen Gresik stake reflects increased corporate 
confidence in Indonesia that the government is serious about reviving its 
long-stalled infrastructure upgrade program, analysts said.

"Given its high-quality products, I believe that Semen Gresik will play a key 
role in the infrastructure development in Indonesia, which in turn should 
contribute significantly to our revenue in the long run," said Rajawali Managing 
Director Darjoto Setyawan, adding that the deal should be fully completed 
tomorrow.

The pending Semen Gresik stake purchase will help diversify Rajawali's asset 
portfolio, which includes telecommunications, property and mining businesses, 
Mr. Darjoto said. Analysts also said the resolution of the long-running 
dispute is good news for Gresik.

"I welcome the deal as it should allow Gresik to focus on growth," said 
Laksono Widodo, head of the research department at Macquarie Securities in Jakarta.

Macquarie is maintaining its "outperform" rating on Gresik, Mr. Laksono 
added, with a 12-month target share price of 38,000 rupiah ($4.15). Gresik shares 
fell 100 rupiah to 24,800 rupiah yesterday in local trading.

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Cemex agrees to sell US$337m stake in Semen Gresik 

JAKARTA, July 24 (Bloomberg): Cemex SA, the world's third-largest cement 
maker, signed an agreement to sell a stake in PT Semen Gresik to Rajawali Group 
for US$337 million, ending a five-year dispute over control of the Indonesian 
cement producer.

Monterrey, Mexico-based Cemex has been trying to exit Semen Gresik, 
Indonesia's largest cement maker, after the government in 2001 failed to honor an 
agreement to hand Cemex control of the state-run company. The government removed 
the final barrier tothe deal last week, when it agreed to let Rajawali choose 
one of the five members of Semen Gresik's board of directors.

The transaction will be completed Wednesday, Roes Aryawijaya, Indonesia's 
deputy to state minister for state enterprises, said in Jakarta on Monday. Cemex 
will revoke its arbitration against the governmentover the deal.

Cemex, which usually runs the companies in which it buys stakes, acquired 
25.53 percent of Semen Gresik in 1998 and originally sought government permission 
to in crease its stake.

The company, which last year paid $5.8 billion for U.K.- based RMC Group Plc, 
in April said it was searching for opportunities to expand in Brazil, Russia, 
China and India. RMC is the world's largest producer of ready-mix concrete.

Cemex Chief Executive Officer Lorenzo Zambrano in April said the company has 
reduced its net debt by $2 billion to $8.5 billion and will continue to pay 
debt until it finds a company to buy. 

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Joyo Indonesia News Service
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