Bank Niaga plans to issue 71 billion rights shares

JAKARTA (JP): Shareholders of publicly listed Bank Niaga approved on Wednesday the bank's plan to issue 71 billion rights shares to raise Rp 8.85 trillion (US$1.3 billion) to finance its recapitalization.

The bank said that the rights shares, each with a par value of Rp 5, would be sold at Rp 124.48.

The existing shareholders can subscribe to 99 new shares for every share they hold, according to the bank.

The bank said that proceeds from the rights issue would be used to boost the company's capital adequacy ratio (CAR) -- the ratio between equity capital and risk-weighted assets -- to 4 percent, the minimum requirement set by the central bank.

The rights issue is part of the government-sponsored bank recapitilization program in which the government will become the standby purchaser of the rights shares. Bank Niaga is one of the banks which qualified to join the recapitalization program.

"If all the existing shareholders do not exercise their rights, the dilution will be up to 99 percent," said C. Heru Budiargo, the bank's corporate affairs head.

However, shareholders were expected to exercise their rights to maintain their ownership in the bank and lessen the burden on the government, Heru added.

The bank's CAR dropped further to minus 62.8 percent at the end of March from minus 23.11 percent at the end of December, due to a worsening balance sheet.

Like other major banks, Bank Niaga has suffered a major setback in financial performance since the start of the country's financial crisis. Most banks have suffered a negative spread in which their interest expense has far exceeded their interest income.

At the end of March, the bank's assets stood at Rp 8.37 trillion with a net equity of minus Rp 7.67 trillion.

The bank's shareholders as of July 19, 1999 were RHB Bena of Malaysia, holding a 12.8 percent stake, PT Lisindodirgahayu Utama, 7.4 percent, PT Dwikom Financindo, 7.8 percent, PT Tunasmas Paduarta, 10 percent, Hong Kong-based Sunshine Services Ltd., 8.7 percent, AJB Bumiputera 1912, 5.4 percent, and the investing public, 47.9 percent.

The government took over Bank Niaga in April after its shareholders failed to improve its capital and took control of the bank's management through the Indonesian Bank Restructuring Agency (IBRA).

IBRA-appointed officers who sit on a seven-member caretaker team for Bank Niaga consist of team leader Rudy Capelle and members, Paulus Wiranata, Daniel James Rompas, Kathay Gusti, Andreas E. Susetyo, Andi Mohammad Hatta and Sigid Moerkardjono. (udi)