IBRA prepares for BCA retender, official says

IBRA prepares for BCA retender, official says

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
is preparing the "relaunch" of a tender process for a 30 percent
government stake in Bank Central Asia (BCA), after it seemingly
failed to obtain a good bid in the first round, according to IBRA
chairman I Putu Gede Ary Suta.

Ary Suta said Monday that plans to relaunch the tender
followed the decision made by State Minister of State Enterprises
Laksamana Sukardi, who now supervises IBRA.

"The Minister has reached a decision about BCA; now we'll just
have to carry it out, and prepare all we need for the
relaunching," he told reporters prior to a meeting with a
visiting team from the International Monetary Fund (IMF).

He said IBRA would open the tender for new comers and current
bidders, providing they met all requirements.

"I think it's only fair to give everyone a chance to
participate," he said.

Asked whether the government would alter the composition of
BCA shares it would offer, he said that it was unlikely, though
possible.

"It depends, the minister (Laksamana) will have to report this
(relaunching) to legislators," Ary Suta said.

In March, legislators approved the sale of a 40 percent stake
in BCA. By July, the government had sold the first 10 percent
through a secondary public offering.

The tender process for the other 30 percent stake, however,
has mostly been shrouded in secrecy by IBRA. It remains unclear
how far the tender process has progressed since it was launched
earlier this year.

In May, IBRA said that more than 10 local and foreign
investors had submitted their bids for BCA stakes.

Sources close to the process, however, said only two bidders
thus far remained.

IBRA declined to reveal their identities, but unconfirmed
reports named investment firms Indonesia Recovery Company Limited
(IRCL) and Newbridge Capital from America.

IRCL is a joint venture between local firm Bhakti Capital
Investama, and Hong Kong's Asia Debt Management.

Many believe Bhakti to be a proxy for BCA's former owner, the
Salim Group, which is trying to claw its way back into the bank.

Newbridge had earlier tried to acquire IBRA's stakes in PT
Astra International, and Salim's giant palm plantation units. In
both attempts, the U.S. investment firm failed.

The divestment of BCA is part of the economic reform targets
set out under a lending agreement with the IMF.

Under a draft of this agreement, known as the Letter of Intent
(LoI), IBRA must finalize the sale by September.

The agency was supposed to complete the sale last year, but
legislators blocked the move over concerns that the then
unfavorable market conditions would drive BCA's share price down.

The BCA issue, and other reform targets missed last year
prompted the IMF to suspend a US$400 million loan tranche from
December.

Now, delays continue to plague BCA sales. IBRA should have
announced the final bidders by late June, but canceled the
announcement, saying it wanted to pursue a better deal.

BCA was once the country's largest private bank before the
government nationalized it over failure to repay debts it owed to
Bank Indonesia.

Strong in the retail market, BCA is seen as among the few
assets under IBRA capable of attracting high-paying bidders.

However, IBRA's indecision over the sales, and a looming IMF
deadline, are likely to weaken the agency's bargaining position
for the highest possible price from the bidders.

IBRA itself is depending on successful BCA sales, hoping it
can catch up on its revenue target for this year.

Under the 2001 state budget, IBRA's contribution should stand
at Rp 27 trillion (about $3.15 billion) by the end of this year.

But throughout the first semester, it managed to secure less
than half of its target, or just Rp 11.2 trillion.(bkm)