Market may be unreceptive to Astra shake-up: Executive

Market may be unreceptive to Astra shake-up: Executive

JAKARTA (JP): The market would react negatively to a change
now in Astra International's senior management and the firm's
share price would plummet, a securities company executive warned
on Monday.

"Astra management is known for its high professionalism and
independence. They are really working for the company, not just
for the majority of the shareholders," associate director of PT
Ciptadana Sekuritas Edhi Santoso Widjojo said in reply to
questions concerning rumored impending changes in Astra's
management.

Informed sources said Cacuk Sudarijanto, the new chief of the
Indonesian Bank Restructuring Agency, had proposed that the Rini
Soewandi-led management team be replaced at the company's
upcoming extraordinary shareholders meeting early next month.

The sources said the request was related to the legal problems
and controversy encountered by IBRA in selling its stake in Astra
to an American investor group led by Newbridge Capital and
Gilbert Global Equity Partners.

The move seemed to have been prompted by a complaint by
Newbridge/Gilbert late last month, accusing Astra's management of
obstructing its conducting of a due diligence of Astra as part of
its agreement with IBRA.

Astra's management flatly denied the charges, arguing that the
securities market watchdog Bapepam approved the conducting of the
due diligence only on Dec. 15.

Astra president Rini Soewandi has repeatedly denied that she
and other directors tried to block the deal or obstruct the due
diligence needed to complete the transaction.

Rini said Astra only requested transparency, what she called a
hallmark of Astra's management, and for an open tender involving
many bidders to gain the highest value of its shares.

"As a publicly listed company, we have to play by the rules of
Bapepam and the securities laws," Rini said.

Astra executives have asserted that as a blue-chip company on
the Jakarta Stock Exchange, Astra International is known for the
high standards of transparency and disclosure of information.

Edhi said Astra was one of the few major corporate debtors who
succeeded last year in restructuring about US$1 billion in
foreign debts.

"This success truly reflects the trust and confidence of the
dozens of Japanese, American and European creditors in the Astra
management."

Edhi suspected a hidden agenda behind Cacuk's request.

He said Cacuk might want to immediately bring in
representatives of prospective investors, including members of
Astra's founder, the Soerjadjaja family.

"I will sell Astra shares if news of the replacement of Astra
management hits the media tomorrow (Tuesday)," Edhi said.

Another analyst, Emilia Dianawati from PT Bapindo Bumi
Sekuritas, agreed there was no reason to change Astra's
management when the company's performance showed significant
improvement.

IBRA, under pressure to raise Rp 17 trillion ($2.4 billion)
for the state budget by the end of March, signed a deal with
Newbridge/Gilbert on Dec. 9 under which the agency would sell
its stake in Astra.

If the transaction is closed next month as scheduled, IBRA
would receive more than Rp 3.5 trillion (about $510 million).

Most analysts consider the Newbridge/Gilbert deal as crucial
for winning back the confidence of foreign investors,
particularly after controversy forced Standard Chartered Bank
Plc. to quit its investment deal with IBRA for Bank Bali early
last month.

The largest single shareholder in Astra, IBRA controls about
40 percent of the firm through a combination of stakes pledged to
it by conglomerates as repayment of their debts to the central
bank.

Other shareholders include Toyota Motor Corp., the
International Finance Corp., which is the private-sector arm of
the World Bank, and the investing public.

"I will truly be surprised if the rumor turns out to be true,"
Emilia said.

Astra's share price has risen from as low as Rp 225 last year
to more than Rp 3,750 at present, with the company making a sharp
turnaround from a huge loss in 1998 to a net profit of Rp 330
billion in the first nine months of last year.

"Astra is not only an automotive company but a holding company
with many subsidiaries operating in a wide diversity of
businesses," Emilia said.

Astra's management, Emilia added, must be staffed by competent
professionals capable of managing car and motorcycle industries,
agribusiness, financial services, heavy equipment and many other
sectors covered by its subsidiaries.

Astra's management seemed irked that Newbridge/Gilbert was
selected without an open tender and the consortium was provided
with prerogatives without having to provide an up-front payment
to buy shares. (udi)