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Astra stake in joint venture firm to fall

JAKARTA, June 25 (Reuters) - Indonesian auto conglomerate PT Astra International , struggling with millions of dollars of debt, said on Tuesday its stake in a joint venture firm with Japan's Daihatsu Motor Co would drop by around 20 percent this year.

Daihatsu plans to inject capital into vehicle producer PT Astra Daihatsu Motor Co to help it expand but analysts said the cash-strapped Indonesian side of the joint venture didn't want to be part of the deal as it moves away from auto production to the more profitable distribution.

Astra said it was still holding talks with the Japanese firm but expected agreement soon after which its holding in the joint venture would fall to around 30-33 percent from 50 percent.

"Our negotiations with Daihatsu have reached a final stage and are expected to finish by July or August...The dilution is because of a capital injection...not as part of a debt repayment," Astra's new president Budi Setiadharma told reporters after a regular shareholders meeting.

An analyst from a foreign securities firm said the move was positive for the automobile industry here as it indicated Daihatsu wanted to make Indonesia one of its production bases for Asia.

But he said it wouldn't have much impact on Astra's share price, which has been generally done well in recent weeks despite ending down 2.17 percent at 4,500 rupiah ($0.52) on Tuesday.

Astra, 32 percent owned by Singapore auto distributor Cycle and Carriage Ltd , receives around six percent of its annual revenue from the joint venture company which also produces some 20,000 cars a year.

At the same shareholders meeting, the company said it would again not distribute a cash dividend from 2001 net profit. The last time it paid a dividend was in 1997.

Earlier this month Astra said it would most likely combine rescheduling and a rights issue in efforts to work out around $827 million in debts.

As part of the efforts to reduce its debts, Astra said it was still in negotiations to sell its majority ownership in car manufacturer PT Toyota Astra Motor to Japan's Toyota Motor Corp .

But the Indonesian company has previously said there was little likelihood of it reaching an agreement this year.

Astra owns a majority stake in PT Toyota Astra Motor and has been considering selling the manufacturing division but retaining the distribution division.

($1=8,680 rupiah)