Merger of Surabaya, BPI bourses signed soon

Merger of Surabaya, BPI bourses signed soon

JAKARTA (JP): Shareholders of PT Bursa Paralel Indonesia
(BPI), the company managing the country's over-the-counter
market, finally agreed in an extra-ordinary meeting yesterday on
the merging of the firm with the Surabaya Stock Exchange (SSE).

BPI's president, Tito Sulistio said that over 70 percent of
the company's 103 shareholders endorsed the merger plan with the
Surabaya-based stock market.

"We are certain now the deal could be signed by the end of
this month," he told newspeople following the meeting here.

He said that the merger plan, which has caused concern among
BPI members -- especially regarding their future operations --
would be carried through "a semi-acquisition procedure".

Tito did not specify what he meant by the semi-acquisition
process but according to Basiruddin A. Sarida, the president of
the SSE said the planned deal would allow the Surabaya-based
bourse to take over all assets and shares of BPI.

"We will take over the shares and assets of BPI at its book
value of Rp 4.8 billion (US$2.18 million)," Basiruddin told
newspeople after attending a seminar on financial and securities
markets yesterday.

He said that the merger was earlier planned to be carried out
through the consolidation of the two bourses' assets.

"But such a merger system was then replaced with an
acquisition of assets and shares of BPI to clear technical
problems hindering the merger plan," he said.

Tito said that BPI will no longer exist when the deal becomes
effective later this month.

"BPI will be liquidated. Its ex-members and share issuers can
automatically join the SSE," he said.

Liquidation

BPI was established late 1990 by the association of money and
securities traders as the first over-the-counter market in the
country, while the SSE was formed in 1989 as the first privately
owned stock market and the only stock exchange located outside
Jakarta.

The SSE is relatively more active than BPI but the SSE, which
is located in the East Java capital city of Surabaya, has
virtually failed to carry out its mission as the alternative
source of finance for companies in the province.

The Surabaya market's early operation was much helped by the
government's double listing policy, which required share issuers
to cross-list their shares both in the Jakarta and Surabaya stock
markets.

The abolishment of the double-listing policy following the
privatization of the Jakarta stock market in 1992 almost
jeopardized the Surabaya market until the government assisted by
requesting share issuers to retain their cross listing.

However, trading on the parallel and Surabaya exchanges remain
inactive as both investors and share issuers still prefer dealing
with the Jakarta Stock Exchange.

Tito said the merger plan is not merely a unification of the
two exchanges but more the redesigning of the country's capital
market operation.

Unlike the Jakarta Stock Exchange, the merged stock exchange
will target small and medium-scale companies, he said, adding the
merged market would also act as a bridge for small-scale
companies to get listed on the Jakarta market. (hen)