Bumi Modern suffers Rp 14 billion losses

Bumi Modern suffers Rp 14 billion losses

JAKARTA (JP): Publicly listed PT Bumi Modern, which operates
and manages the five-star Hyatt Regency hotel in Surabaya, East
Java announced a net loss of Rp 14 billion (US$5.6 million) in
the first semester of this year.

The company's president Sri Hoedojo Sontokusumo said yesterday
that the loss was caused by an oversupply of hotel rooms in the
province.

He said there were a total 1,542 hotel rooms in 1993 and the
number has continued to increase since then.

Last year, he said, there were 4,231 hotel rooms in Surabaya
and this would continue to increase in the next five years with
the expected operation of several new hotels.

He said several new hotels which were under construction would
start operating next year, including Ibis hotel, Century, Concord
and Intercontinental hotels.

"These new hotels will add at least 1,750 rooms in the city,"
he said. "This oversupply means Bumi Modern will suffer a loss,"
he said.

Besides the oversupply, he said the company had debts totaling
US$60 million as of June.

"This is another cause for Bumi Modern's loss in the last
three years," he said.

According to the company's annual report, the company had
suffered losses since 1994.

The company incurred losses worth Rp 11.52 billion in 1994.
This increased to Rp 24.86 billion in 1995 and Rp 25.21 billion
in 1996.

Sri Hoedojo declined to estimate the total loss in 1997 but
said the management would strive to improve the company's
performance this year.

Meanwhile, Bakrie Capital Indonesia (BCI), a subsidiary of
Bakrie and Brothers Group, yesterday pledged to increase their
stake in the ailing Bumi Modern.

Bakrie said it planned to purchase all of PT Asuransi Jiwa
Bersama Bumi Putera's (AJB) stake in the company.

PT AJB currently owns 58.49 percent of Bumi Modern.

"We are ready to buy all AJB shares and it depends on PT
Asuransi Jiwa Bumi Putera now," Eddy J Soebari, vice president of
Bakrie Capital Indonesia, said yesterday.

"Hopefully the transaction will be finalized by the end of the
year," he said.

In May this year, BCI announced the purchase of a 25 percent
share of the ailing PT Bumi Modern from PT AJB Bumi Putera for Rp
27.84 billion.

Sri Hoedojo also indicated yesterday that BCI was allowed to
buy up to 58.4 percent of Bumi Modern at Rp 2,475 per share from
PT AJB.

He said BCI's entry would boost the company's performance in
the coming years.

"We need a strong partner with a strong financial condition,"
he said. (aly)