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)