Bumi Modern fails to get approval for rights issue
Bumi Modern fails to get approval for rights issue
JAKARTA (JP): Publicly listed tourism and hotel concern PT
Bumi Modern failed to secure approval from the Capital Market
Supervisory Board (Bapepam) for its planned rights issue to raise
Rp 9.3 trillion (about US$1.28 billion) to acquire oil company
Gallo Oil Ltd. of the United Kingdom.
Company president Jay Abdullah Alatas said on Tuesday Bumi
Modern had not met all of Bapepam's requirements for the rights
issue.
"We will soon comply with all the regulations as set out by
Bapepam and other related institutions so we can complete the
rights issue soon," he said.
According to Bapepam, Bumi Modern has yet to submit the
results of the asset and financial audits of Gallo Oil, which
must be performed by an independent foreign auditor.
There is also a conflict of interest in the planned purchase
of Gallo Oil, because Bakrie Capital Indonesia (BCI) -- the
majority shareholder of Bumi Modern -- has indirect ownership in
Gallo Oil, according to Bapepam.
BCI, through an affiliate, owns 25 percent of Gallo Oil.
Gallo Oil has two blocks of concessions in Yemen with
recoverable oil reserve of about one billion barrels, according
to Jay. The two blocks are the 2,856-square-kilometer Block R-2
in East Al-Maber and the 7,417-square-kilometer Block 13 in Al-
Armah.
Gallo Oil currently is 75 percent owned by Long Haul Holdings
Ltd. and 25 percent owned by Minarak Labuan Ltd., which is
related to the Bakrie Group.
Economic observer Umar Joworo said Bumi Modern had not given
the public enough information on the planned rights issue to
allow them to make an investment decision.
"They haven't presented adequate evidence that they can meet
their promise to start producing oil in late 2001. We do not want
investors to only buy hope from them," he said.
Bumi Modern expects to begin oil production in late 2001 when
it finishes the exploration phase, Jay said.
Umar also doubted the capability of the management of Bumi
Modern, most of whom have zero experience in the oil business.
"Most of them are property people. How will they manage to
transform themselves into oil company executives," he asked.
Jay countered that Bumi Modern was ready to recruit people
with expertise in the oil industry when the company completed its
planned purchase of Gallo Oil.
Bumi Modern had planned to hold a one-for-24 rights issue to
raise Rp 9.3 trillion, far higher than its total assets of Rp 443
billion.
About 98.5 percent of the proceeds of the rights issue would
be used to finance the acquisition of Gallo Oil, and the
remaining 1.5 percent, or about Rp 150 billion, would go toward
strengthening Bumi Modern's working capital.
The right shares, which would have a nominal value of Rp 500
each, would be sold at face value.
Bumi Modern, which is 52 percent owned by Bakrie Capital and
48 percent owned by the public, had total assets of Rp 443
billion as of last June, compared to Rp 423 billion as of
December last year.
Its total revenue was Rp 18.5 billion during the first six
months of this year, compared to Rp 93 billion during the whole
of 1998.
The company booked a net loss of Rp 5 million during the first
six months of the year, compared to a net loss of Rp 29 million
in 1998. (udi)