Funds prepared to defend PGN shares

Funds prepared to defend PGN shares

The Jakarta Post, Jakarta

State-owned gas utility PT Perusahaan Gas Negara (PGN) said
the government and the company's underwriters had prepared funds
to help prevent its share price from falling below the initial
public offering (IPO) price of Rp 1,500 per share.

PGN president WMP Simandjuntak said the money, amounting to Rp
300 billion (US$35.50 million), would be placed in a special
account. He did not provide further details.

"It is to stabilize the price. Should the share price fall,
they (underwriters) would buy more shares," Simandjuntak told
reporters after a hearing with the House of Representatives
Commission VIII on mining and energy.

PGN last week sold 30 percent of its shares via the IPO at a
price of Rp 1,500 each, raising around Rp 1.9 trillion in
proceeds, of which Rp 1.1 trillion went to the company and the
remainder to the state coffers. The underwriters of the IPO were
Credit Suisse First Boston (CFSB), PT Danareksa Sekuritas and
ABN-Amro.

PGN's shares in the initial public offering was 8.56 times
oversubscribed.

On Monday, PGN listed its shares on the Jakarta Stock
Exchange. During the market debut, PGN shares managed to rise to
Rp 1,750 before closing at Rp 1,550. But on Wednesday, the share
price closed unchanged at Rp 1,500 amid an overall declining
market trend in the region as investors took profit from recent
gains.

PGN has said that the IPO proceeds will be used to finance its
gas pipeline projects. But the company also plans to issue bonds
next year to raise additional funds for the projects.

In the first quarter of next year, PGN will issue around
US$100 million worth of bonds.

Simandjuntak said on Wednesday the company would likely set a
coupon rate of 7.5 percent for the 10-year eurobond.