House okays BCA sale plan
JAKARTA (JP): The House of Representatives approved late on Wednesday a plan to sell a 51 percent stake in Bank Central Asia (BCA) this year to strategic investors.
The House ruled that the divestment program was to be implemented in two stages: A 30 percent stake is to be sold first, followed by a 21 percent stake in the second round.
The decision was made at a hearing between Minister of Finance Boediono, State Minister of State Enterprises Laksamana Sukardi and House Commission IX for financial and development planning affairs.
Earlier in the day chairman of the Indonesian Bank Restructuring Agency (IBRA) I Putu Ary Suta said the government expected to sell BCA shares at about Rp 1,750 each if the House approved the government plan to divest a 51 percent stake in the country's largest retail bank.
Ary Suta told legislators that the above price included a premium of over 25 percent on the current share price of about Rp 1,375.
He added that to obtain a premium price for the BCA shares, the government must sell a controlling block of shares to strategic investors.
He also said that the time was now ripe to sell the publicly listed bank amid improving market confidence following the installment of a new administration.
The sale of government shares in BCA is part of the country's key economic program agreed recently with the International Monetary Fund (IMF), which on Monday approved the disbursement of a US$395 million loan to the country.
The IMF approval should help revive investor confidence in the ailing economy. The government is also expected to soon obtain a rescheduling facility from the Paris Club of creditor nations for some $2.8 billion in sovereign debts maturing this year and next.
The rescheduling facility is a crucial ingredient for the sustainability of the current 2001 state budget.
The IMF sent a senior officials to Jakarta earlier this week, several hours before the fund decided on the Indonesian loan, to convince the country's top legislators on the importance of the BCA sale program.
BCA, which was founded by the Salim Group, was nationalized by the government in 1998 in the aftermath of the devastating 1997 Asian financial crisis. The government has spent billions of dollars to save the bank at taxpayers' expense.
The government has banned Salim from repurchasing the bank.
But there have been rumors that Salim was trying to foil the government's attempt to sell BCA to strategic foreign investors as once it is sold it will be difficult for Salim to get it back.
Elsewhere, Ary Suta said there had so far been two bidders who have expressed interest in purchasing the government BCA stake. However, he declined to name the bidders. (10)