Astra meeting may become showdown

Astra meeting may become showdown

JAKARTA (JP): Tuesday's extraordinary general meeting of PT
Astra International's shareholders is shaping up to be a showdown
between the Indonesian Bank Restructuring Agency (IBRA) and the
Astra management led by Rini Soewandi.

IBRA, which claims to own 45 percent of the country's largest
automobile company, will push ahead with its proposal to unseat
Rini in a final bid to speed up the sale of its Astra stake
before the end of next month.

But some analysts say the replacement of Astra management
could speed up IBRA's sale of its Astra shares but at a lesser
price as investors' interests might be dampened by the
appointment of a new management team with an unknown track
record.

They said IBRA might find it hard to convince other
shareholders of the merits of a massive management shake-up at a
time when the company is enjoying a robust recovery.

At the meeting, the Rini Soewandi-led management will likely
flaunt its impressive performance record in leading the company
through a critical period in 1998 when the Astra share price
plunged to as low as Rp 225 under the weight of the economic
crisis and political uncertainty.

Astra shares are currently hovering at Rp 3,700.

Astra, which reported a net profit (unaudited) of more than Rp
808 billion (US$109 million) last year, against a net loss of
over Rp 1.9 trillion in 1998, is also one of the few Indonesian
companies to succeed in gaining foreign creditors' trust for
restructuring $1 billion in debts.

But a change in management tops the meeting agenda as IBRA
blamed the failure of its previous deal with an American investor
group led by Newbridge Capital/Gilbert Global on the
uncooperative attitude of Astra management.

Goei Siauw Hong, Head of Research at securities company PT
Nomura Indonesia, said IBRA would easily gain majority votes for
its proposal for a management shakeup because Rini, who became
Astra chief executive officer (president) in June, 1998, was
popular among creditors and bankers but not among Astra
shareholders.

"I think Rini is not working for the shareholders, and the
Astra management has not been as transparent as it often claims,"
Hong said.

Hong cited the recent sale of Astra Securities and several
other questionable transactions with companies controlled or
affiliated with politically powerful businessman Mohamad Bob
Hasan in 1997.

"We do not know until now what was the sale price of Astra
Securities company," he added.

Hong said Astra's management created suspicion when it
resisted the due diligence process that would have been executed
by Newbridge/Gilbert as part of its deal with IBRA.

Newbridge/Gilbert did not have a problem with the
confidentiality agreement demanded by Astra, except that it
unusually contained an "indemnity clause" which the investor
group could not accept, Hong added.

"The investor group was afraid Astra management would have
used a nominee to sue the investor consortium later on based on
that indemnity clause," he said.

But Hong also admitted that even if some irregularities were
found in a due diligence investigation, they might involve just
one or two hundred billions of rupiah which are relatively not
significant for a company of Astra's size.

Another analyst, Arif Arryman from ECONIT research institute,
said it would be an enormous scandal if the rights of IBRA, as
the holder of 45 percent stake in Astra, were not be honored at
the Astra shareholders meeting on Tuesday.

"The sale of Astra shares is greatly important to support the
state budget and to restore IBRA's credibility in wooing back
foreign investors to accelerate the country's economic recovery,"
Arryman said.

In December, IBRA chose Newbridge/Gilbert as the preferred
bidder for its Astra stake, but the American investor group
failed to conclude a definitive agreement by the end of
the exclusivity period on Jan.31.

Newbridge/Gilbert has blamed Astra management for obstructing
a due diligence investigation, but Astra management flatly
rejected the allegation saying that it simply asked for a
confidentiality agreement to protect Astra and the interests of
shareholders and to indemnify Astra directors against legal
consequences for disclosing proprietary information.

IBRA decided last week to terminate its controversial
agreement with Newbridge/Gilbert and opened a competitive bid
that offers a fair opportunity to all interested investors. (udi)