JSX halts Bumi Modern trading amid rights issue questions
JSX halts Bumi Modern trading amid rights issue questions
JAKARTA (JP): The management of the Jakarta Stock Exchange
(JSX) suspended on Monday trading of property concern Bumi Modern
amid controversy over its massive rights issue plan.
The exchange said in a statement it took the action because
the company had not given a specific schedule for its limited
share offering plan.
"The trading suspension was effective as of Feb. 21, in the
first session of trading, at 9:30 a.m. until further explanation
is given (by the company)," the exchange said.
The company's stock price managed to rise by Rp 25 to Rp 350
before the suspension.
Institutional sales broker at Trimegah Securindolestari, Vonny
Juwono, supported JSX's move because the market knew virtually
nothing about the rights issue plan following a hasty
extraordinary shareholders meeting last Friday.
"We don't know yet what the next step Bumi Modern will take
after it conducted the shareholders meeting on Friday," Vonny
said.
The Capital Market Supervisory Agency (Bapepam) initially
rejected Bumi Modern's rights issue plan in late December,
leading the company to reschedule its shareholders' meeting to
last Friday.
The agency gave last-minute approval to the company's plan on
Friday, heightening suspicion among investors.
Bapepam chief Herwidyatmo defended on Monday the agency's
decision, saying the company provided the required information to
Bapepam at the last minute.
"Bapepam is not in a position to ban (the shareholders
meeting). Bapepam is in the position to protect investors through
disclosure of information," he said.
A few hours after it received the agency's approval, Bumi
Modern held its extraordinary shareholders meeting.
Nearly 90 percent of the minority shareholders, who control
about 48 percent of the company's shares, approved the company's
rights issue plan.
Bumi Modern plans to issue rights shares to raise about Rp 9.3
trillion (about US$1.28 billion) in fresh funds to acquire oil
company Gallo Oil Ltd. of the United Kingdom, which has two
concession areas in Yemen.
Many analysts questioned the plan because the total assets of
the company constituted only about 5 percent of the projected
rights issue proceeds.
Skepticism was also fueled by the fact the target company in
the acquisition plan is owned by a firm linked to businessman
Aburizal Bakrie, the majority shareholder of Bumi Modern.
The head of research at Socgen-Crosby Indonesia, Lin Che Wei,
said the planned acquisition of Gallo Oil by Bumi Modern served
only as a ploy by the Bakrie Group to transfer Gallo Oil assets
into liquid securities assets through "manipulated pricing" on
the JSX.
He said if Bumi Modern proceeded in its rights issue plan, the
Bakrie Group would be able to pay its huge debt to the Indonesian
Bank Restructuring Agency (IBRA) using its Bumi Modern assets,
whose book value would inflate following the acquisition.
"It will only become a scandal when IBRA agrees to accept the
portfolio assets instead of cash from Bakrie. I guess IBRA will
face difficulty in selling the assets to investors," he said.
"So, it's only a tactic by Bakrie to settle its debt to IBRA."
The Bakrie Group's communications manager, Lalu Mara Satria
Wangsa, said Bumi Modern followed all the regulations and
therefore the market should not be suspicious about its planned
rights issue.
He questioned why the company was a "target" of suspicion
because transactions involving enterprises under the same group
were common practice in Indonesia.
He said proceeds from the rights issue would be used to
finance the acquisition of Gallo Oil, and not to repay the Bakrie
Group's debt to IBRA.
"But if later Bakrie Capital wants to sell its ownership in
Bumi Modern, it's its right as the shareholder," he said.
Bumi Modern, which is 52 percent owned by Bakrie Capital and
the remainder by the public, held total assets of Rp 443 billion
as of last June, compared to Rp 423 billion as of December last
year.
Its total revenue was Rp 18.5 billion during the first six
months of the year, compared to Rp 93 billion during the whole of
1998. (03/rid)