P.T. Indofood Sukses Makmur is seeking investors to purchase up to 60% of its ownership interests in the Bogasari flour milling, bag manufacturing and shipping operations.
Indofood, Indonesia's largest food manufacturing company, said it plans to create four new subsidiary spin-offs of the business in the first stage of the restructuring and to sell controlling interests by February. The new subsidiary companies will be organized as follows:
• P.T. Bogasari Sentra Flour Mills, in Jakarta, will have a flour milling capacity of 2.3 million tonnes per year. The world's largest flour milling operation at one site, Bogasari Sentra is being valued at Rp. 3,059 billion (U.S.$387 million).
• P.T. Intisari Flour Mills, in Surabaya, will have an annual flour milling capacity of 1.3 million tonnes. The mill's 13-hectare site includes full access to port facilities. Asset value was placed by Indofood at Rp. 1,489 billion (U.S.$189 million).
• P.T. Inti Abadi Kemasindo, a flour bag manufacturer in Citeureup, West Java, with annual production capacity of more than 100 million bags. Total assets were valued at Rp. 64 billion (U.S.$8 million).
• P.T. Indobahterra Era Sejahtera, a maritime operation including three ships with total capacity of 100,000 tonnes and three barges with combined capacity of 8,000 tonnes. Asset value was placed at Rp. 164 billion (U.S.$21 million).
Bogasari's pasta operations will continue as a separate division because the consumer nature of that business is similar to the company's noodles, edible oils and fats, snack food and baby food divisions, Indofood said.
Although not required by law, Indofood planned to seek shareholder approval of the restructuring plan at a special meeting Oct. 6 in Jakarta.
In the second stage of the restructuring, "strategic and/or financial investors" will be invited to acquire partial ownership interests of up to 60% in the four subsidiary companies. To maximize benefits, particularly for the two flour milling businesses, Indofood said, potential investors include "wheat suppliers, flour users, wheat and flour traders (export and import), and financial investors."
Indofood said that it expected to receive offers from investors by Sept. 30 and that the sale should be completed by Feb. 1, 2000.
Initial public offerings in the four subsidiary companies are planned as a final step in the restructuring, which is part of Indofood's strategy to raise U.S.$400 million to begin repaying its debt, estimated at U.S.$770 million.
Announcement of the plan follows the June purchase of a 40% interest in Indofood from the Salim Group for U.S.$650 million by First Pacific Co., a Hong Kong affiliate of Indonesia's Salim family.