Bank Permata plans reverse stock split

Bank Permata plans reverse stock split

The Jakarta Post, Jakarta

Bank Permata, the country's seventh largest bank in terms of
assets, plans to reduce the number of its shares outstanding on
the Jakarta Stock Exchange (JSX) through a reverse stock split.

The 1:25 reverse split, to be effective in early June, will
increase the price of Permata's shares 25 times, which should
prevent the shares from becoming a target of speculation.
Speculators often target low-priced shares.

"The move is aimed at making our shares more attractive for
long-term investors, and at the same time to deter speculators,"
said Permata president Agus Martowardojo at a meeting with
investors.

Permata shares on the JSX ended lower by Rp 5 to Rp 45 after
the announcement due to profit taking.

The bank now has total assets of Rp 28.98 trillion (US$3.41
billion). Its capital adequacy ratio, as of the end of last year,
reached 10.78 percent, well above the central bank's minimum
requirement of 8 percent.

The government, which holds a 91.3 percent stake in Permata,
plans to sell 71 percent of its shares in the bank: 51 percent to
strategic investors and 20 percent to public investors. The sale
is expected to start in September or October.

Agus said that several top investment banks from Europe and
the United States had expressed interest in the bank, by
conducting a preliminary assessment of the bank.

However, Agus refused to disclose the names of the potential
investors.

He explained that most of them came to Permata after receiving
reports that a protracted legal dispute over a huge amount of
funds stashed at the bank had been resolved.

Agus said that the Supreme Court had issued a new verdict
favoring Permata. He did not elaborate.

Permata had been locked in a dispute with a private company
called PT Era Giat Prima (EGP) over some Rp 456.5 billion worth
of funds, claimed by the latter as a commission fee obtained from
Bank Bali in 1999.

But the government, which later merged Bank Bali into Permata,
has insisted that the transaction between Bank Bali and EGP was
not valid.