Bank Universal set to sell shares through rights issue

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)