Silakencana Acquires a 50% Stake in Tuban Petro

PT Silakencana Tirtalestari, which is owned by businessperson Honggo Wendratno, has reached an agreement with the Department of Finance and the Assets Management Company (PPA) to acquire a 50% stake in PT Tuban Petrochemical Industries (Tuban Petro) for IDR3.2 trillion.
In the wake of the transaction, PPA has secured IDR3.2 trillion in contribution to the 2008 State Budget, larger than IDR300 billion targeted. With the agreement, the State Oil Company (Pertamina) has to cancel its intention to acquire a majority stake in Tuban Petro.

The confirmation about the entry of Silakencana was made after the Minister of Finance gave a go to PPA to dispose its stake asset in Tuban Petro. The Department of Finance approved the acquisition if Silakencana could service its IDR3.2 trillion debt faster than 2014 initially scheduled.

With the transaction, Silakencana increases its stake in Tuban Petro from 30% to 80%, while PPA still retains a 20% stake. President Director of PPA Mohammad Syahrial revealed the Minister of Finance had given a go to dispose PPA's stake in Tuban Petro.

"We ask for IDR3.2 trillion in cash payment, not in notes," he told me last week.

The legal documentation process of the acquisition is still being made and is scheduled for completion next year. Following the acquisition, PPA will still hold a 20% stake in Tuban Petro.
Silakencana is owned by Honggo Wendratno-partner of Hashim S. Djojohadikusumo, the owner of Tirtamas Grup-who owes PPA IDR3.2 trillion. Previously, Hashim intended to acquire a 45%-50% stake in Tuban Petro, but the plan was cancelled due to differences in opinions between Honggo and Hashim.

After the transaction, the government will review whether it will still retain its stake in Tuban Petro. However, judging from the company's good outlook, it is likely the government will retain its stake in Tuban Petro.