Sulfindo's sale may draw foreign bids: sources

Indonesian chemical producer Sulfindo Adiusaha is up for sale with a price tag of $700 million and may draw interest from Thai industrial conglomerate Siam Cement SCC.BK and South Korea's Hanwha Chemical (009830.KS) when first-round bids are due in late August, sources with knowledge of the deal said.

The deal is set to be another indication of increasing foreign interest in Southeast Asia's biggest economy, which is attracting investors because of strong economic growth and a buoyant stock market.

However, several deals have also faltered recently as Indonesian businessmen have high price expectations, analysts said.

Sulfindo is controlled by the Victoria Group, which is owned by Indonesia's Tanojo family, who also own small lender Bank Victoria (BVIC.JK) and brokerage Victoria Securities.

"Chemical demand has a good potential but I think the price is too high for the firm at around 9 to 10 times EBITDA," said a chemical analyst at a state-owned brokerage firm, who declined to be named.

"Consumer firms, which get the highest valuation now, are only valued at around 11 times EBITDA while plantation firms get around 7 times. I think it will be hard for them to get a buyer with the typically volatile margin industry."

BOND SALE PULLED

A spokeswoman for Siam Cement declined to comment.

South Korea's Hanwha Group said its chemicals unit has looked at Sulfindo, but has made no decision to put in a bid. "Since Sulfindo runs petrochemical businesses, Hanwha Chemical (the group's chemical unit) had looked into it at a working-level. But nothing is in progress nor determined," a Hanwha official told Reuters.

Macquarie (MQG.AX) is the sell-side adviser for the deal, three sources told Reuters. A Macquarie spokeswoman in Singapore declined to comment.

"The first-round bids are due toward the back-end of August," one of the sources said.

Earlier, bankers had said the company was selling a stake of up to 40 percent, but sources with knowledge of the deal said the whole company is for sale.

Sulfindo's sale plan comes after it did not issue a five-year fixed-rate dollar bond in January because of weak investor interest.

Sulfindo did not respond to Reuters queries seeking comment.

Standard & Poor's on May 16 downgraded Sulfindo's credit rating to CCC from B-, saying it faced a prolonged delay in obtaining sufficient external financing.

Sulfindo produces caustic soda, chlorine, ethylene dichloride, vinyl chloride and polyvinyl chloride (PVC), products used in the pulp and paper industry, water treatment and for pipes, according to the company's website. Source: Reuters