BII plans rights issue to fund its acquisition
BII plans rights issue to fund its acquisition
JAKARTA (JP): Bank Internasional Indonesia (BII) is planning a
rights issue to enable state-owned Bank Mandiri to acquire the
financially troubled banking unit of the Sinar Mas group, BII's
new management said Monday.
Cholil Hasan, coordinator of the newly appointed BII
management team, said the bank would launch a rights issue after
Bank Mandiri completed its due diligence on the bank.
"The due diligence process is expected to be completed within
two months," Cholil told reporters during a media briefing on the
bank's acquisition plan on Monday.
The government announced the planned acquisition of BII by
Bank Mandiri late last month.
The central bank transferred on Friday the supervision of the
bank to the Indonesian Bank Restructuring Agency (IBRA) following
worries that its holding company, Sinar Mas, might fail to pay
$65 million in interest falling due on June 30.
The transfer would allow IBRA to take over Sinar Mas's debt
from BII, paving the way for the acquisition of BII by Bank
Mandiri.
Sinar Mas owes $1.3 billion to BII and IBRA has agreed to
guarantee the debt under a complex restructuring scheme reached
with the group earlier this year.
In return, the indebted group has pledged fixed assets to the
agency worth at least 145 percent of its BII debt.
Under the acquisition plan, the agency is also to take over
Sinar Mas's loans and restructure them outside the bank.
Cholil said the proceeds from the rights issue would boost
BII's capital adequacy ratio (CAR), which was nine percent as of
last month.
It is feared that the bank's CAR will drop once Sinar Mas
defaults on its debt.
Indonesian banks are required to reach a year-end minimum CAR
of eight percent as part of the government's measures to keep the
country's banking industry healthy.
During the gathering, Cholil also announced IBRA's decision to
replace the old BII management with a new management team.
Cholil, who is former senior vice president of Bank Mandiri's
international banking division, chairs the new management team
with three of the former members of BII's board of directors,
Halim Susanto, Fransiska Oei, and Rudy N.Hamdani, as members.
Also named as member of the team was Gunawan Setiawan.
"IBRA has also named an oversight team with Rusli Prakarsa
from Bank Indonesia as coordinator of supervision and Hiroshi
Tadano from BII, Anthony Elam from IBRA, and Keat Lee from Bank
Mandiri as members," he said.
Both teams would ensure that customer deposits in BII would
remain safe, Cholil said.
"The operation of BII will continue as normal," Cholil said,
adding that the teams were committed to boosting the bank's
services to its customers. ((03/bkm)