Bank Universal set to sell shares through rights issue

JAKARTA (JP): Bank Universal is set to sell 37.21 billion shares through a rights issue at Rp 136.06 a piece to finance its recapitalization costs which have doubled to Rp 5.06 trillion (about US$632 million) from the original estimate made early this year.

Stephen Satyahadi, the bank's president, said after an extraordinary shareholders meeting on Monday the sharp increase in recapitalization costs was caused by the rupiah depreciation, the larger sum needed for bad loan provisions and deteriorating conditions brought about by negative interest spread during the first quarter.

"The Rp 5.06 trillion figure was based on the bank's financial condition as of March 1999," Stephen said, after the shareholders meeting approved the rights issue for the May 25 to June 2 period.

Shareholders approved the 39-for-1 rights issue to follow up the recapitalization agreement the bank's majority shareholder, PT Astra International, concluded with the Indonesian Bank Restructuring Agency (IBRA) last month.

Under the government-sponsored bank recapitalization program, shareholders are required to put up 20 percent of the recapitalization funds, with IBRA funding the remaining 80 percent.

Bank Universal's vice president Jerry Ng said the original bank recapitalization cost, estimated on the basis of its condition as of December 1998, stood at around Rp 2.4 trillion.

"The bank's majority shareholder, Astra International, has put up Rp 477 billion (20 percent of the initially estimated recapitalization cost) at the Bank Universal escrow account at the central bank," Jerry said.

But the bank's share of the recapitalization funds has now increased to more than Rp 1 trillion, he said.

"IBRA will take care of the additional sum needed if Bank Universal fails to attract foreign investors to cover the shortfall (around Rp 523 billion)."

Jerry said Bank Universal was talking with foreign investors interested in having a stake in the bank.

IBRA executive Franklin Richard Matulessy said his agency would also increase its share of the recapitalization funds for the other seven private national banks, if they could not put up additional funds on top of the 20 percent they had pledged on the basis of the initial estimate. (udi)