Jakarta Offers to Buy Cemex’s Gresik stake

Jakarta Offers to Buy Cemex’s Gresik stake
Published: 17 August 2004

Indonesia’s government said it has moved to end a dispute involving Mexico’s
Cemex SA by proposing to buy back the company’s stake in cement maker PT
Semen Gresik. Cemex, which owns a 25.53 per cent stake in Gresik, has
struggled to complete a 1999 deal to take over the state-owned company. Its
problems include a battle with the legislature in the province of West
Sumatra, which has vowed it would take over a Gresik subsidiary, PT Semen
Padang, to prevent its sale.

The Mexican cement company last year filed a request with the International
Center for the Settlement of Investment Disputes, a Washington-based
affiliate of the World Bank, to act as an arbiter in the dispute with the
Indonesian government over control of Gresik.

State Enterprise Minister Laksamana Sukardi said Indonesia’s central
government has proposed teaming up with state-owned pension fund PT
Jamsostek to buy back the Gresik stake from Cemex.

But a spokesman for Monterrey-based Cemex said Monday that "up until now,
Cemex hasn’t received any proposal from the government of Indonesia," and
that the arbitration process continues.

Cemex paid $290 million in 1998 for its state in Semen Gresik, Indonesia’s
largest cement company, but was unable to raise that to 51% as agreed
because management at Gresik unit Semen Padang prevented the deal.

The legislature of West Sumatra province, where Padang is based, said it was
taking over Semen Padang to prevent it from being sold to a foreign company.

Last December, Cemex appealed to the Washington-based International Center
For the Settlement of Investment Disputes, seeking revocation of the
purchase agreement and damages.