IBRA says Rudy Ramli himself picks UK's SCB
IBRA says Rudy Ramli himself picks UK's SCB
JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
revealed on the weekend that it was former Bank Bali president
Rudy Ramli's financial advisor J.P. Morgan who chose the UK-based
Standard Chartered Bank (SCB) to become the bank's strategic
investor.
IBRA corporate secretary Christovita Wiloto said in a media
statement that in a letter dated April 21 to J.P Morgan
Securities Asia Pte. Ltd in Singapore, Rudy referred to the
opinion of J.P. Morgan representatives in Jakarta that the
proposal offered by SCB was the most feasible compared to
proposals offered by GE Capital and ABN AMRO.
"With a copy of this letter, it is expected that the public,
particularly those related to Bank Bali, including its employees,
can avoid disinformation, which would only lessen the value of
Bank Bali," Christovita said.
IBRA provided The Jakarta Post with a copy of the letter,
which was signed by Rudy and former Bank Bali deputy president
Firman Soetjahja and addressed to J.P. Morgan Securities Pte.
Ltd.'s managing director Stephen W. Berger and vice president
David Khoo in Singapore.
However, the letter also expressed a great concern on the part
of Bank Bali's Board of Directors and Board of Commissioners
about the limited time available to Bank Bali to review the
binding heads of agreement provided by SCB.
Rudy stated in his letter that Bank Bali's directors and
commissioners were also concerned about the severely limited time
available to review the agreements provided by IBRA in connection
with the recapitalization program (Recapitalization Agreements).
"Therefore the Board of Directors and Board of Commissioners
request J.P. Morgan in Singapore to provide Bank Bali with its
specific commercial and financial advice on the terms and
conditions of the heads of agreement (with SCB) and the
Recapitalization Agreements and to coordinate the legal advice on
such documents from Bank Bali's foreign legal advisers," Rudy's
letter said.
IBRA has been under fire over its deal with SCB in connection
with the British bank's plans to invest in Bank Bali.
Bank Bali staff have protested the plans, arguing that IBRA
and the British bank were engaged in a conspiracy to acquire Bank
Bali from the Ramli family through a hostile takeover.
"But the letter clearly says that the entry of SCB into Bank
Bali was based on the advice made by Rudy Ramli's financial
advisor J.P. Morgan" Christovita said.
Rudy quoted the opinion of J.P. Morgan representatives in
Jakarta as saying that the proposal from SCB was "the only
feasible offer from a strategic investor for Bank Bali to pursue
under the current schedule for participation in the
recapitalization imposed by IBRA."
The letter also pointed out that two other contenders,
including GE Capital and ABN AMRO, were unlikely to match the
offer of SCB.
GE Capital
However, GE Capital Asia Pacific president Daniel H. Mudd said
in a letter to Farid Harjanto and Mardy Sutanto of IBRA on April
22 that his company was still greatly interested in continuing
discussions on its memorandum of understanding with Bank Bali on
March 5.
"We would like to meet with you to examine and discuss our
proposal for the potential transaction, including possible
modifications with a view to reaching mutually acceptable terms,"
Mudd said in his letter, a copy of which was sent to the Post.
Mudd said he realized the severe time restrictions faced in
concluding a deal but suggested that" it would be beneficial to
all parties to thoroughly examine and discuss the potential
transaction notwithstanding the deadline and seek your support in
allowing this to occur."
"Based on extensive discussions with the Bank (Bali) and its
advisor JP Morgan, they chose us as the only potential investor
to sign a memorandum of understanding with the Bank on March 5,
1999," Mudd added in his letter.
He recalled GE Capital's letter of interest to Bank Bali on
Nov. 5, 1998 and the many discussions with Bank Bali to review
its financial information.
"We completed a preliminary due diligence in December, 1998,"
Mudd said.
In this regard, Mudd added, GE Capital remained ready to
discuss the transaction with the government forthwith and devote
resources to examining and finalizing the transaction, including
conducting a full due diligence.
Bank Bali was taken over by IBRA late in July after its owner
failed to provide cash by the extended deadline to finance 20
percent of the bank's recapitalization cost.
Under the country's bank recapitalization program, the
government would provide up to 80 percent financing.
IBRA then signed a contract with SCB in the same month,
allowing the latter to temporarily lead the management of Bank
Bali for three years.
SCB also promised to buy a 20 percent stake in the bank to
help finance the recapitalization program. The British bank had
opened a US$56 million escrow account in Chase Manhattan Bank.
Publicly listed Bank Bali was to launch a rights issue in next
month to facilitate the recapitalization program. IBRA was to
become a standby purchaser of the rights shares not exercised by
the existing shareholders. SCB would then buy the Bank Bali
shares from IBRA.
But the Bank Bali staff staged a massive protest against the
SCB-lead management team for weeks, prompting IBRA to replace the
temporary team and revise its management contract agreement with
SCB.
But IBRA still maintains the investment agreement with SCB,
the first major foreign investor to participate in financing the
country's costly bank restructuring program.
Analysts said that if the SCB deal failed, it could cause a
serious threat to the country's overall bank restructuring
program as this would discourage other foreign investors to
participate.
IBRA is planning to sell a 30 percent stake in Bank Central
Asia (BCA) to the public in the near future to raise some Rp 3
trillion for the government coffers.
BCA, previously the country's largest private bank, has also
been taken over by IBRA.
If the BCA flotation is successful it may also create a
positive domino effect on the overall economy. (rei)