BII obtains shareholders' approval to launch rights issue<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
Publicly-listed Bank Internasional Indonesia (BII) obtained
\nshareholders' approval on Tuesday to launch a rights issue to
\nraise Rp 4.81 trillion (US$552.87 million) to strengthen its
\ncapital.<\/p>\n
Sigit Pramono, head of BII's management team, said the move
\nwould boost the ailing bank's capital adequacy ratio (CAR) to 14
\npercent, compared to the minus 47 percent it recorded at the end
\nof last year.<\/p>\n
The central bank has required all banks to have a minimum CAR
\nlevel of 8 percent. CAR is the ratio between capital and risk-
\nweighted assets.<\/p>\n
\"All preparations are close to finalization and we're
\noptimistic of the success of the (rights issue) plan as the
\ngovernment will act as a standby-buyer,\" Sigit told reporters.<\/p>\n
The rights issue, which means issuing new shares to raise
\ncapital, is expected to be completed in July.<\/p>\n
As a standby-buyer, the government must purchase the new
\nshares offered should if fail to attract investors.<\/p>\n
The government, represented by the Indonesian Bank
\nRestructuring Agency (IBRA), now controls around 75 percent of
\nthe bank in return for trillions of rupiah worth of
\nrecapitalization bonds it has injected since it was taken over in
\n1999.<\/p>\n
The government first injected bonds worth Rp 6.6 trillion in
\n1999 to boost its CAR level to beyond the minimum 4 percent
\nrequirement at the time.<\/p>\n
Up till now, the government has injected some Rp 21 trillion
\nworth of bonds whose interest rate is covered by the already
\nstrained state budget.<\/p>\n
Under the rights issue plan, if minority shareholders do not
\npurchase the new shares, their stakes in BII would be diluted
\nfrom the current 25 percent ownership. But the government's
\nownership will increase to around 86 percent.<\/p>\n
IBRA has said that prior to the issuance of new shares, the
\nbank would also have to implement a \"reverse stock\" measure to
\nincrease the stock's price to a minimum level of Rp 100 per share
\nso as to meet requirements of the Capital Market Supervisory
\nAgency (Bapepam).<\/p>\n
The Bapepam ruling stipulates that a publicly listed company
\ncan only launch a rights issue if its share price is valued at
\nleast Rp 100 per share.<\/p>\n
BII's share price is currently hovering at Rp 20 per share.<\/p>\n
Sigit said that after the completion of the plan, the bank
\nwould then focus on restructuring its non-performing loans
\n(NPLs), amounting to Rp 5.2 trillion as of last year, or about 60
\npercent of its total loans.<\/p>\n
\"With the planned debt restructuring, we aim to reach a less
\nthan 10 percent of NPLs by the end of the year,\" he said.<\/p>\n
Sigit said that by the end of the year the bank's CAR was
\nexpected to reach around 20 percent.<\/p>",
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