| To : Business Editor | 24th March 2000 For immediate release |
CYCLE & CARRIAGE LIMITED
ACQUISITION OF A 23.1% STAKE IN P. T. ASTRA INTERNATIONAL TBK
The following press release was issued today by the Company's 25%-owned associate, Cycle & Carriage.
For further information please contact:
| Forrest International Limited | Tel: (852) 2522 6475 (office) |
| Sue Gourlay | (852) 2501 7936 (direct) |
Full text of this and other Group announcements can be accessed through the Internet at "www.jardines.com".
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ACQUISITION OF A 23.1% STAKE IN P. T. ASTRA INTERNATIONAL TBK
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Cycle & Carriage Limited ("CCL") wishes to announce that it has today been informed that the consortium which CCL is leading has been successful in the tender to acquire 1,019,880,060 shares in P.T. Astra International Tbk ("Astra International") from the Indonesian Bank Restructuring Agency, at the price of 3,700 rupiah per share. These shares will represent 38.4% of the share capital of Astra International on a fully diluted basis.
The other members of the consortium are Government of Singapore Investment Corporation Pte Ltd, Lazard Asia Fund, P.T. Bhakti Investama and Batavia Investment Fund II Ltd. CCL will be seeking to acquire a net 614 million shares representing 23.1% of the fully diluted share capital of Astra International with the balance to be acquired by the other consortium members.
JP Morgan were the financial advisors for the CCL Consortium.
Consideration
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CCL will be paying US$310 million (or S$530 million) for its stake. The purchase price was arrived at taking into consideration Astra International's past and expected future performances and the market value of the shares. The CCL consortium is required to deposit the aggregate purchase price with Citibank, Jakarta as escrow agent by 28 March 2000 and the closing day will occur on or before 31 March 2000. S$150 million of the purchase price will be financed from internal resources and the balance by long term borrowings.
About Astra International
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Astra International was established in 1957 and is listed on the Jakarta and Surabaya Stock Exchanges. It is one of the largest companies in Indonesia in terms of market capitalisation, having a dominant presence in the automotive sector in Indonesia with domestic market shares of approximately 50% for motor vehicles and 55% for motorcycles as well as being the largest automotive distribution company in Southeast Asia. Further, Astra International has integrated interests in automobile and motorcycle manufacturing, assembly, distribution and retail, as well as automotive component manufacturing and distribution. Its portfolio includes some of the best known marques in this region like Toyota, Daihatsu, Isuzu, BMW and Peugeot automobiles and Honda motorcycles.
With 6 listed entities within its fold, the Astra Group ranks among the largest conglomerates in Indonesia and has investments in other industries including agribusiness (palm oil and wood-based products), heavy industries, information technology, telecommunications and financial services. Astra Agro Lestari, one of the companies within the Astra Group, is the second largest palm oil company in the world in terms of hectares under cultivation. It is also one of the largest private sector employers in Indonesia, employing a total of 94,400 people as at 31 December 1999.
As a consequence of heavy borrowings in US dollars to finance expansion as their manufacturing plants reached capacity in 1996-1997, Astra International was severely impacted by the Asian crisis. It was forced to restructure its debt at the parent company level and within its subsidiaries. The shareholders' funds of Astra International have been severely depleted by losses incurred on US dollar borrowings.
Rationale
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CCL believes that the acquisition will bring substantial synergy to its strategy to expand in the region. It also represents a unique opportunity for CCL to not only focus on its existing core competency in the automotive sector where significant investment opportunities are scarce, but also to diversify its earnings base with Astra International's non-automotive businesses.
With the investment in Astra International, CCL will become the established leader in the Southeast Asian automotive sector. The acquisition will give CCL access to a large emerging growth market and the fourth most populous country in the world.
CCL's experience in automotive distribution fits in well with Astra International's strategic focus and its experience in working with automobile principals will be a strategic asset in optimizing Astra International's value.
Astra International has a committed local management which through a series of proactive measures, has enabled the Astra Group to weather the crisis and the severe contraction in the Indonesian market.
Motor sales have begun to rebound with a return of economic stability and an improving economy. The automobile market grew by 100% in 1999 and is expected to double again in the current year, enabling automobile sales to return to pre-crisis levels in 2003 or 2004. CCL is confident of Astra International's future prospects as it has largely completed its debt restructuring exercise and following on the due diligence exercise, projections indicate that Astra International will be able to meet its debt repayment obligations.
The main driving force behind Astra International's recovery is the continuation of the political stability which, combined with the ongoing economic recovery, bodes well for Astra International's underlying fundamentals.
Financial Impact
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Had the transaction been in place in 1999, CCL's consolidated net tangible assets per share would have been reduced by about S$2.00 from the position of S$5.25 as at 31 December 1999 due to the substantial amount of goodwill which would have been written off directly to reserves. This is based on information on Astra International's performance for the year ended 31 December 1999 made available during the due diligence exercise and which are still subject to audit.
On the same basis, CCL's consolidated earnings per share after exceptional and extraordinary items for the year ended 31 December 1999 would have increased by 6.2 cents to 54.6 cents.
On completion of the acquisition, the net debt to capital ratio of the CCL Group is expected to increase to about 54%. Interest on the borrowings will be serviced from the cash flow from the existing operations of CCL. Steps will, however be taken to reduce the level of borrowings in the CCL Group.
Substantial Shareholders' and Directors' Interests
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None of the substantial shareholders or directors of CCL have any interest, direct or indirect, in the acquisition.
Submitted by Ho Yeng Tat, Group Company Secretary on 24/03/2000 to the SGX
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