SCG Packaging to Purchase 55% Stake in Indonesian Paper-based Packaging Producer Fajar

FajarPaper is a leading packaging paper manufacturer in Indonesia with an installed capacity of 1,300,000 metric tons per year of Kraft Liner Board and Corrugated Medium Paper for carton-box packaging and Coated Duplex Board for display packaging.

May 13, 2019 - The Siam Cement Public Company Limited (or "SCC") hereby on May 10 announced that SCG Packaging Public Company Limited (or "SCG Packaging"), SCC's core operations in the packaging business which is 99.04% owned, has entered into a conditional sale and purchase agreement for a 55% stake in PT. Fajar Surya Wisesa Tbk. (or "Fajar") from the existing shareholders. Fajar is a leading Indonesian packaging paper company and is also listed on the Indonesia Stock Exchange. This transaction will be executed through a subsidiary of SCG Packaging.

The acquisition of the 55% of the total issued and paid-up capital in Fajar is valued at approximately 9.6 trillion Rupiah (approximately 21,150 million Baht or USD 665 million). Following the completion of this transaction, there will be a mandatory tender offer, as required by the local Indonesian securities regulations (Otoritas Jasa Keuangan) and Indonesia Stock Exchange. This transaction is expected to be completed in Q3/19, whereby financing will come from internal sources.

For the future growth opportunity in the packaging business, SCC is in the process of exploring the feasibility of raising equity at the SCG Packaging level. This feasibility is expected to be completed by the end of 2019.

The acquisition of Fajar will allow SCC to enhance its ASEAN growth platform, especially in Indonesia that provides tremendous future growth opportunity for SCG Packaging. Considering Indonesia's population of 270 million and its per capita consumption of packaging paper, the market growth potential there is almost 3 times that of Thailand's.

Over the years, SCG Packaging has demonstrated its ability to progressively grow its business across ASEAN through both organic growth and acquisitions. Its business model is driven by the merits of being a total packaging solution providers, with the complete array of products and services available. This is further complemented with SCG Packaging's emphasis towards innovations for customers.

With the total sales of 1.38 million tons of packaging paper in 2018, Fajar registered sales of 9.94 trillion Rupiah (approximately 21,900 million Baht) and recorded profit for the year of 1.41 trillion Rupiah (approximately 3,100 million Baht). Fajar has a total staff of approximately 2,900 employees as of December 31, 2018 and had total assets of 10.97 trillion Rupiah (approximately 24,100 million Baht).

This is considered an asset acquisition transaction. The total size of this transaction is 6.92% of the total assets stated in SCC consolidated financial statements as at March 31, 2019, and when combined with those in the past six months prior to the date of this transaction, the total size is 7.89%. Thus, the disclosure of this transaction is not required pursuant to disclosure rule for the acquisition and disposition of assets. This transaction is not a connected transaction.

About FajarPaper

FajarPaper is a leading packaging paper manufacturer in Indonesia with an installed capacity of 1,300,000 metric tons per year and a range of products which include Kraft Liner Board and Corrugated Medium Paper for carton-box packaging and Coated Duplex Board for display packaging. The company (PT. Fajar Surya Wisesa Tbk.) was established as a limited liability company under the laws of Indonesia on February 29, 1988.