Kiani to Offer Stocks in IPO

PT Kiani Kertas has planned to offer some stocks through initial public offering (IPO) as the company's financial condition has been better.

The President Commissioner of Kiani Kertas Luhut Binsar Pandjaitan said the financial condition of the company has been better due to the capital injection by Hashim S. Djojohadikusumo, the brother of Prabowo Subianto, the owner of the paper manufacturing company.

Prabowo Subianto owns Kiani Kertas through PT Fayola Investment Limited (99.99%) and PT Metra Tujuh Dua owns 0.01% stakes. The company has repaid as much as US$47 million debt to Bank Mandiri in some payments this year.

"We plan to offer the shares of Kiani but we have to wait for the improvement on financial condition as well as on operational side. We are now focusing to repay the debt to Bank Mandiri in November this year at the latest," he told me last week.

He said the company also has repaid the debt to United Fiber System of Singapore so that the debt pressure has been lighter. UFS has disbursed US$45 million to help Kiani Kertas. "We have repaid the debt to IFS."

Hashim injected his money in return to get 50% ownership at the company. Kiani Kertas is with the production capacity of 525,000 metric tons per annum.

Luhut added the company has planned to expand they production capacity. "We will use single mill system and we will gradually increase the capacity."

Bank Mandiri's Director Riswinandi said the debt repayment of Kiani was under the scheme of refinancing.

"If they ask for some credit to Bank Mandiri, we will see the track record of the debtor," he told me last week.

He said that the debt of Kiani Kertas at Bank Mandiri has been performed as in January 10 the company has repaid US$37 million loan. "At present the company's obligation to Bank Mandiri is US$170 million, and the company will settle it on 2007."

Previously Hashim has planned to takeover 45% shares of PT Tuban Petrochemical Industries (Tuban Petro) of 70% shares of the government through the State Assets Management Company at IDR3.2 trillion.

If the transaction happens, the government will have 25% stakes at Tuban Petro. The rest stakes of the company belong to Kencana Lestari Group and Hashin at 30% and 45% respectively.

But Hashim has cancelled the plan. Hashim is the son of the late noted Indonesian economist Prof. Soemitro Djojohadikusumo. The 52 years old man is known as one of Indonesia's present conglomerates.

Through PT Prima Comexindo Trading, Hashim owns some business in Russia, Kazakhtan, Azerbaijan, and Africa. Last year, through Nations Energy Co, an oil and gas company based in Calgary of Canada, Hashim sold some oil and gas mining and some other facilities in Kazaks to CITIC Group of China at US$1.91 billion.