WITH a hand in businesses from forestry and pulp to construction, United Fiber Systems is healthily diversified, CEO Jaka Prasetya says. 'Investors typically don't like diversification but, especially in a downmarket, I think diversification works best for us,' he told BT last Friday.

Mr Prasetya: 'Demand is picking up for wood chip products, and we are ready to take advantage of improving paper and pulp markets'

The actively traded counter, with an average daily trading volume of 63 million shares over the past month, has also often ranked among top gainers or losers. Several project announcements have in recent years triggered spikes in its share price, but the projects failed to materialise after that.

One example is the proposed construction of a South Kalimantan pulp mill, intended to make use of Unifiber's forestry concession rights to 260,000 hectares in Indonesia. It signed an agreement with China MCC20 Construction last April to build an US$893 million pulp mill, after a contract with a previous Chinese partner was aborted due to long delays in regulatory clearance. But construction has not begun.

Given current financial market conditions, Unifiber now wants to break up the project into phases and construct a pulp mill with a production capacity of 200,000 tonnes per annum first, before upsizing to the intended 600,000 tonne capacity. And this new plan's design and financing is expected to be finalised by year-end, Mr Prasetya said.

Back in 2006, Unifiber's plan to take over existing pulp mill Kiani Kertas was also dropped after several delays. Its lawsuit against Merrill Lynch, filed in the US last year, accuses Merrill of backing out of a contract to provide takeover financing for that deal, and the case is still going on.

Apart from attempts to launch pulp production and tap its forest assets, Unifiber's forestry and pulp division owns and operates a South Kalimantan wood chip mill. 'Demand is picking up for wood chip products, and we are ready to take advantage of improving paper and pulp markets,' said Mr Prasetya.

As for its construction division, one recent development was a joint venture with a Sandi Group unit to work on a S$1.23 billion Libyan social housing construction project, consisting of 5,000 housing units, a hotel, administrative buildings and related infrastructure.

This will be financed with a 15 per cent advance payment from the Libyan authorities and may need some project or working capital facility, but not more than is typical for such construction projects, Mr Prasetya said.

Unifiber's construction division's business in Singapore, Poh Lian Construction, remains the group's key revenue generator, with an order book of S$450 million.

Last week, Unifiber also announced its latest partial repayment of a US$12 million equity-backed loan from YA Global Investments, in the form of shares.

The company has issued about 450 million shares to YA Global so far, and full repayment will be reached by issuing less than 40 million shares at the current share price, with the option of paying in cash too, Mr Prasetya said.