Investors' ownership in Baligraha to decline by 66%

Investors' ownership in Baligraha to decline by 66%

JAKARTA (JP): The share ownership of the investing public in
hospital operator PT Baligraha Medikatama Tbk will decline by 66
percent after the merger of another hospital operator Siloam
Gleneagles into the company.

"Public investors's ownership in Siloam Gleneagles will
decrease by as much as 15 percent as a consequence of the
merger," Baligraha president Yohanes Oentoro told securities
analysts in the company's public showcase.

The two hotel operators are slated to hold their respective
shareholders meeting by late March to approve the planned merger,
he said.

Under the plan, PT Siloam Gleneagles Health Care, partly owned
by Lippo Group, would become part of Baligraha, but the surviving
entity in the merger process would operate under its own name.

Siloam Gleneagles, which is listed in the Surabaya Stock
Exchange (SSX) owns 77.5 percent of its merger partner Baligraha.
But its financial performance is less promising than that of its
subsidiary despite the fact that it legally acts as the parent
company.

Siloam Gleneagles floated its shares on the SSX two years ago
due to its inability to meet the listing requirement on the JSX.

Securities analysts said that the merger was purely designed
to allow Siloam to float its shares on the JSX rather than to
give added value to shareholders.

"By injecting itself into Baligraha and giving the company its
name, Siloam will have little or no difficulty in entering the
JSX," a security analyst stated. "The merger is purely a backdoor
listing."

Analysts were also concerned with the fact that the merger was
between two parties with unequal financial performances.

After the merger, according to Yohanes, the price of the
combined company shares would be Rp 1,846 each.

Baligraha shares would be priced at Rp 1,000 as per March 6
prior to the trading suspension, and Siloam would be traded at Rp
2,000 each, according to Yohanes.

Baligraha and Siloam presently have outstanding shares of 88
million and 484 million.

Following the merger the combined companies would have an
initial total cash balance of Rp 84 billion -- Rp 75 billion from
Baligraha and Rp 9 billion from Siloam.

Currently, Baligraha's Return on Assets (ROA) -- the ratio
between a net income and total assets -- stands at 10 percent,
while Siloam stands at minus 10 percent.

After the merger the ROA is expected to be 2 percent,
according to Johannes.

Baligraha and Siloam -- as of Dec. 31, 1999 -- booked a net
income of Rp 20 billion, minus Rp 19 billion.

The merged entity is expected to have a net income of Rp 6
billion, Rp 36 billion and Rp 65 billion in year 2000, 2001 and
2002.

Baligraha and Siloam total assets as per Sept. 1999 stood at
Rp 156 billion and Rp 378 billion.

According to Yohanes, Siloam issued a rights share last
October to raise Rp 168 billion which was used to repay its
debts, including Rp 51 billion to Baligraha and Rp 33 billion to
Lippo Bank. (udi)