Court reprimands Bapepam over Dairy Farm tender debacle
The Jakarta Post, Jakarta
The Jakarta Administrative Court issued a warning letter on Jan. 27 to the Capital Market Supervisory Agency (Bapepam), reminding the agency it must comply with the court's suspension of a tender offer by the Dairy Farm group.
The letter ordered Bapepam to suspend the Jan. 20 process, following a suit filed by PT Matahari Putra Prima Tbk (Matahari) against Dairy Farm Group -- both shareholders of Hero Supermarket -- on the issuance of exchangeable bonds by PT Hero Pusaka Sejati Tbk and a tender offer proposed by Nalacca BV, a subsidiary of Dairy Farm Group.
However, the tender offer went ahead as scheduled on Jan. 22, reports said.
The case once again puts Bapepam, the agency tasked to oversee all regulations in the capital market are properly conducted, under the spotlight.
Matahari legal adviser Lucas said the continuation of the tender offer did not protect the rights of minority shareholders.
"We have adhered to all of Bapepam regulations when making the tender offer," Dairy Farm's legal adviser from Hadiputranto, Hadinoto and partners, Timur Sukirno, said.
On Dec. 2, pan Asian retailer Dairy Farm Group through its subsidery Nalacca BV offered to buy Hero Supermarket shares at Rp 2,800 (30.6 U.S. cents) a share. Dairy Farm, a member of the Jardine Matheson Group, currently owns 12.23 percent of Hero shares through another subsidiary, Mulgrave Corporation BV, as stated by the Jakarta Stock Exchange on its website.
The 50.1 percent controlling stake of Hero's shares are owned by PT Hero Pusaka Sejati, while Matahari owns 7.87 percent, Papua BV 7.29 percent, and Oppenheimer FD Inc 6.07 percent.
PT Hero Pusaka Sejati issued exchangeable bonds due in February for 24.55 percent on its Hero Supermarket shares.
Matahari has taken legal action against this issue, saying there were irregularities in the transaction.
Dairy Farm acknowledged there were disruptions to the tender offer and said these could hurt small shareholders' interests.
"The exchangeable bonds are not being exercised during this tender offer... and are only exchangeable for existing shares and not new shares," said Timur.
As for the offer made on Hero's shares, he said shareholders could choose either to sell or keep their shares.
Matahari claimed to respect Bapepam's decision not to cancel the tender offer process but asked the capital market watchdog to probe the issuance of the exchangeable bonds and the tender offer.
To date, Bapepam has further probed the case as advised by investors. Bapepam legal bureau head was not available for comment. (003)