Bumi Modern gets approval for rights issue

Bumi Modern gets approval for rights issue

JAKARTA (JP): The Capital Market Supervisory Agency (Bapepam)
finally gave approval on Friday to publicly listed tourism and
hotel concern PT Bumi Modern's controversial rights issue plan.

"Bapepam has issued a letter giving allowing us to go ahead
with the rights issue plan," the company's president, Jay
Abdullah Alatas, said after the extraordinary shareholders'
meeting on Friday evening.

Jay said the agency approved the plan after the management
agreed to allow minority shareholders to decide whether the
massive limited public offering should proceed.

The meeting to decide the fate of the rights issue plan, which
was initially scheduled in the morning, was delayed until the
agency gave its approval.

In the meeting, nearly 90 percent of the minority
shareholders, who control about 50 percent of the company's
shares, agreed to continue the plan, he said.

Bumi Modern plans to issue rights shares to raise about Rp 9.3
trillion (about US$1.28 billion) in fresh funds to acquire oil
company Gallo Oil Ltd. of the United Kingdom.

Many analysts initially questioned the plan because the total
assets of the company constituted only about 5 percent of the
projected rights issue proceeds. More doubts were fueled by the
fact the target company in the acquisition plan is owned by a
company linked to businessman Aburizal Bakrie, the majority
shareholder of Bumi Modern.

A transaction involving a potential conflict of interest is
only legal if it is first approved by the minority shareholders.
Bapepam initially rejected Bumi Modern's rights issue plan in
late December, leading the company to reschedule its
shareholders' meeting.

Bapepam, which suspected a possible mark-up, required Bumi
Modern to hire an international auditor to appraise the two
blocks of oil concession owned by Gallo Oil.

The agency head of corporate financial analysis Freddy R.
Saragih refused to comment on the rights issue.

"No, I don't want to talk to the media today," he said.

A source at the finance ministry said Freddy risked being
replaced for what was perceived as his overly exacting stance on
the rights issue proposal.

Bumi Modern's total assets were Rp 443 billion as of last
June, compared to Rp 423 billion as of December last year.

Gallo Oil has two blocks of concessions in Yemen with
recoverable oil reserves of about one billion barrels, Jay said.
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.

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
the remainder 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 the year, compared to Rp 93 billion during the whole of
1998. (udi)