The Indonesian government will turn down the request from Mexican-based cement giant Cemex to approve an offer from the Rajawali Group to purchase Cemex’s shares in state-owned cement maker PT Semen Gresik (SG). The decision by the government to use its "first right of refusal" appears likely to sink the settlement of the already protracted dispute between the government and Cemex over the later’s right to take eventually control of SG based on a deal made in 1998 (writes the Jakarta Post).
A source at the State Ministry for State Enterprises said the government would refuse to give its approval to Cemex to sell the stake to Rajawali, and would instead appoint a third party, consisting of local companies, to purchase the stake. However, the acceptance of new investors will be subject to Cemex approval. Should the company refuse to approve the government’s new bidder, it will force both parties to seek other investors -- signaling another setback to a settlement.
"The government will tell Cemex that it will use its right as the majority shareholder to buy the company’s stake at the same price offered by Rajawali, but through a third party as the government does not have enough funds available," said the source. He refused, however, to name the third party, but rumors in the stock market say that it will be a consortium made up of a number of state and local government-owned companies formed by the government to take control of the stake.
Based on the 1998 deal, it is Finance Minister Sri Mulyani who has the right to make a final decision on the Cemex case, not the state minister for state enterprises, as the matter is related to the management of state assets. The source said State Minister for State Enterprises Sugiharto has advised Mulyani on how to respond to the request, with Mulyani eventually agreeing to the options put forward by Sugiharto and his officials.
Meanwhile, PT Andalas Tuah Sakato (ATS), a firm wholly owned by the West Sumatra administration, said it had received financial support from Singapore-based investment firm Pan-Asia Presidio Capital Advisors Pte Ltd to purchase the Cemex stake. "Presidio has agreed to provide some $400m for the purchase of the stake. However, Cemex has yet to respond to our offer. We are hoping the government will help us secure the stake for the sake of the West Sumatran people," said ATS president director Suharman.