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)