ASEAN KEY DESTINATIONS
June 6, 2008
Indonesia's state enterprises ministry will propose to parliament that shares in PT Krakatau Steel, the country's biggest steel maker, be sold through an IPO, Reuters quoted a senior ministry official as saying Thursday.
Krakatau Steel with assets worth an estimated 11 trillion rupiah ($1.18 billion), is one of 37 state firms slated for privatisation to help fund a widening budget deficit.
The government had said it was considering selling a stake to strategic investors, but nationalist politicians criticised the option fearing the firm would end up in foreign hands.
ArcelorMittal SA, the world's largest steelmaker, and BlueScope Steel Ltd, Australia's largest steelmaker, have shown interest in acquiring a stake in the firm.
"We will propose to parliament to sell the shares via an IPO. Hopefully, parliament's approval will be issued this month," Didu, secretary to the state enterprises minister, told Reuters.
If approved by parliament, the IPO is likely to be in September and the government may sell a maximum of 40 percent of shares in the Java-based steel maker, Didu said.
"It will be up to Krakatau Steel whether to sell the shares in stages or for the whole (40 percent) at one time," he said, but did not elaborate on the reason for opting for an IPO instead of a strategic sale.
Krakatau Steel said in April it expects to raise at lease 2 trillion rupiah from the sale of the first 20 percent of its stake.
Any share sale of state-owned enterprises has to be approved by parliament, which could hold up the process, particularly if a foreign investor is involved.
Local protests over price, which was seen as too low, and the lack of competitive bids forced the government to scrap a memorandum of understanding to sell Krakatau Steel to Ispat International NV in 1998.
The government wants to keep a majority stake in Krakatau Steel, which produced 1.8 million tonnes of steel products in 2007, or 30 percent of Indonesia's total steel demand.