Analyst says Astra should not disclose inside information

Analyst says Astra should not disclose inside information

JAKARTA (JP): Securities analyst David Chang said on Thursday
that PT Astra International had a legitimate reason not to
disclose all inside and proprietary information requested by the
Newbridge/Gilbert-led consortium of investors.

" I see the coordination between Astra and IBRA as not so
good. Thus, Astra does not trust the preferred bidders," Chang of
PT Trimegah Securindolestari said, referring to Newbridge Capital
and Gilbert Global Equity Partners who are conducting a due
diligence on Astra.

The Indonesian Bank Restructuring Agency (IBRA) chose on Dec.
9, without a competitive bidding process, an investor group led
by Newbridge and Gilbert of the U.S. as the preferred bidder to
purchase the agency's 40 percent stake in Astra International.

The due diligence, conducted by Newbridge/Gilbert on behalf of
IBRA, is part of the process to complete the transaction sometime
in February as scheduled.

Chang said Astra could not be expected to provide all
confidential information because it could not be assured a
potential investor would make a definite commitment.

Sources close to the transaction said Newbridge/Gilbert was
approved on Dec. 15 to conduct a due diligence after IBRA
resolved the legal technicalities of its ownership of Astra
shares.

The sources said Newbridge/Gilbert submitted two bundles of
lists, containing requests for information and documents, to
Astra's management.

One list was for 80 categories of documents. The other
requested Astra's management to provide 81 categories of
information on Astra as a holding company, 123 categories of
information and projections on its automotive division, 260
categories of information on its agribusiness division and more
than 100 categories of information on its financial services
division.

"You tell everything in a due diligence and the information
you give could be the lethal weapon against your business," Chang
added.

"Astra does have the right not to disclose too much about the
company when Astra is still not sure whether the investors will
keep it confidential."

The sources said the information, projections and other
reports requested by Newbridge/Gilbert were so detailed as to
cover new products to be launched, their costs of production,
Astra's pricing strategy, profit margin and other proprietary
information. They said the information could put Astra out of
business if it was leaked to its competitors.

Chang concurred that questions about products' profit margins
were market-sensitive information which would be detrimental to
Astra if obtained by competitors.

"It is therefore reasonable to demand that a preferred bidder
put up an upfront payment as evidence of its commitment. If such
an upfront payment was not required, then everybody could go to
Astra and say 'I want to look at your books. I want to know all
the details'," Chang said.

He did not consider the appointment of a preferred bidder to
be a problem as long as the process was transparent and fair.

It also would be normal for IBRA to have a preference for
particular foreign investors, he said, emphasizing again that the
process should be transparent and the underlying reason sensible.

"And preferred bidders certainly always have the advantage and
other bidders may only try their luck."

IBRA deserves the right to decide who is the preferred bidder
and, because Astra was an important national firm, it was
understandable for IBRA to decide who was the preferred bidder,
he said.

"You just cannot open it up for everybody to bid because the
ones who bid highest may not be the best for the company."

Chang said there was no need to worry that any party could vie
for the 40 percent stake because the company's shares were not
cheap. (udi)