16 April 2008
Govt may sell stake in KrakatauSteel through strategic sale

State Minister for StateEnterprises SofyanDjalil said Tuesday thata strategic sell off of portionsof PT Krakatau Steel wouldbe better than an initial public offering in the currentadverse conditions of theglobal market.

A strategic sale means thegovernment will offer a blockof shares to a limited numberof potential investors.

According to Sofyan, concerns over the current state ofthe global economy and capital markets was expected todampen the appetite of publicinvestors, should the companybe privatized by an initialpublic offering (IPO).

"Under present marketconditions, it seems impossible to make Krakatau Steel go public through an IPO,"he said as reported by Antara.adding that low pricesoffered for shares would be aconsequence.

Capital and financial markets across the globe have been hit hard by concerns over U.S. recession that could well turn into a global economic slowdown.

However, he said the government would carry out further study before decidingwhich option should be usedto privatize the nations biggest steel maker.

Both options were firstaired by the government during a hearing about the 2008 privatization plan with the House of Representatives in February.

At that time, the govern ment said if Krakatau Steel took the strategic sale method,it would prefer to sell up to 20 percent of the company, while under an IPO, the shares sold would equal a 40 percent stake in the company.

The management of Krakatau Steel has been widely reported to favor the IPO option, saying that it would generate funds faster than a strategic sale.

The ministers statements were hot on the heels of a widely reported interest of Arcelor Mittal, the worlds largest steel producer, in Krakatau Steel.

Arcelor has been reported to be eyeing up to a 40 percent stake in the Indonesian company.

Commenting on this, Sofyan said Krakatau Steels management needed to study Mittals proposal in order to make sureany steps taken would result in the improvement of the firms production capacity.

This year, the government plans to sell stakes in 44 state firms including train manufacturer PT INKA, Bank Negara Indonesia and national flag carrier Garuda Indonesia, (uwi)

Source :  The Jakarta Post, Page : 13 

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