Released on: August 19, 2008, 7:46 am

Press Release Author: Strategic Indonesia

Industry: Financial

Press Release Summary: The critical issues within certain subsidiaries of PT Citra
Marga Nusaphala Persada Tbk, especially PT Citra Margatama Surabaya, that have
direct and substantial effects to the Company's value.

Press Release Body: Jakarta. The critical issues within certain subsidiaries of PT
Citra Marga Nusaphala Persada Tbk (the Company), especially PT Citra Margatama
Surabaya (CMS), (the Subs) that have direct and substantial effects to the Company's
value, as it was already raised and expressed in EGM 30 June 2008.

CMS case and its effect to the Company CMS, which is 95% owned by the Company, built
a 12 km toll road connecting Waru area to Juanda Airport along the southern border
of Surabaya city and Sidoarjo county.

The toll road commenced commercial operation in May 2008. The concession contract
(Perjanjian Pengusahaan Jalan Toll, or PPJT) was drafted based on the assumption
that the traffic volume is around [53 thousand] unit vehicle per day. However, the
realized traffic after commencing operation was significantly lower, it is only less
than 15 thousand per day (less than 25% of PPJT base traffic projection).

This situation makes it nearly impossible for CMS to service its debts, and the
operating cash flow is almost insufficient to cover operational expenses, let alone
interest expenses (not to mention the repayment of principal of outstanding debts).
This situation is predicted to persist for many years (if not forever), posing great
and imminent risk of heavy cash flow burden, hence risk of default, to the Company.
It was suspected that the prediction of low traffic volume had been made aware to
the incumbent management of either the Company or CMS in the early stage of project
development prior to construction, nonetheless the project was initiated until its
completion in April 2008.

Initial study predicted the potential traffic was only [35 thousand] unit vehicle
per day, however later studies predicted higher number and the concession contract
(PPJT) was made based on optimistic projection of [53 thousand] traffic volume.
After PPJT was signed studies that were conducted provides prediction of even higher
traffic volume, the latest is [79 thousand] carried out by ITS (although there was
some doubts on the methodology of that study).

In addition, given one or other reasons, the design and alignment of the track of
toll road (Right of Way or ROW) was also revised, increasing the construction cost,
coupled by increase in construction cost due to increase in fuel price and higher
(almost quadrupled) land acquisition cost. Consequently, the actual cost of
development was substantially higher than planned cost that was in the PPJT
contract. In conclusion, the lack of knowledge and prudence in studying the actual
potential of traffic along Waru-Juanda ROW had led CMS's management to belief in the
over-estimate number of traffic volume projections.

This belief in turn led to being over-confident in the profitability prospect of the
project that blinded the incumbent management from being cost-conscious. Finally it
resulted in over-investment in a project that has substantially lower traffic
potential than what was projected. Now, the operating cash flow of CMS only just
enough for supporting its daily operations and no financial capacity even to service
the interest of its debts, let alone principal or dividend.

The value of the Company's investment in CMS's equity is deeply in question, if
there is any left. Current situation is very critical. CMS's loan documentation
provides certain recourse to the sponsor of CMS' project, i.e. to the Company.
Considering the lack of financial capacity to service even the interest on its
financial obligation (debts), CMS must resort to external financial support, which
could lead to potential financial burden to the Company given such recourse. The
Company might be required (by CMS's creditors) to recapitalize CMS, i.e. to put more
equity, to reduce CMS's outstanding debt to the level serviceable by CMS's current
and future potential operations.

This will further drain the Company value as the return to such recapitalization in
really questionable. This double loss situation is a real threat to the Company's
financial condition, hence discounting the Company's equity (share) value from
whatever its current fair market price is. As such, this situation should be made
aware to any potential investor interested in investing in the Company. Currently,
CMS has slightly over [IDR 2 billion] monthly revenue, while monthly interest on its
debts is more than [IDR 10 billion].

The operations absorb most of its operating revenue, leaving the interest expense
un-serviced due to lack of cash flow. Total asset of CMS is nearly [IDR 1.4
trillion] and total principal of the debt is nearly [IDR 1 trillion], and total
equity is nearly [IDR 400 billion].

Total assets and total principal of debts are consolidated in the Company's
financial statement while the equity is reported as investment in the Company's
financial statements. Write off on this equity investment will immediately and
directly hit the Company equity, hence correction to the Company's share value. On
top of it, any recapitalization to cover some or all of unsustainable debt of CMS
(portion from [IDR 1 trillion]) will increase the Company un-consolidated debts (as
such recapitalization will be financed by new bank debt) of which any unrecovered
portion of this recapitalization will further hit the Company's equity.

About Strategic Indonesia:
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Source: Strategic Indonesia

Contact:
Erdin Purnomo, Analyst
STRATEGIC INDONESIA
Telephone: +6221.571.9418

Web Site: http://www.strategicindonesia.com

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