PT Bumi Modern to float rights shares

JAKARTA (JP): Publicly listed tourism and hotel concern PT Bumi Modern said on Thursday it would float rights shares to raise funds to acquire oil company Gallo Oil Ltd. of the United Kingdom.

Bumi Modern president Jay Abdullah Alatas said the company had signed a purchase agreement with Gallo Oil's shareholders, with various conditions attached.

"Gallo Oil has two blocks of concessions in Yemen with recoverable oil reserve of about one billion barrels," Jay said during the company's public expose at the Jakarta Stock Exchange office.

The two blocks are the 2,856 square-kilometer Block R-2 in East Al-Maber and the 7,417 square-kilometer Block 13 in Al- Armah, Jay said.

Gallo Oil is currently 75 percent owned by Minarak Labuan Ltd. and 25 percent owned by Long Haul Holdings Ltd.

To finance the acquisition, Jay said Bumi Modern would hold a one-for-24 rights issue, slated for January next year.

The rights issue is expected to raise Rp 9.5 trillion through the issuance of 19 billion new shares, Jay said.

The right shares will have a nominal value of Rp 500 each and will be sold at Rp 500.

Shares of Bumi Modern rose 10 percent to close at Rp 300 on Thursday.

Jay expressed optimism the company's rights issue next year would be welcomed by existing shareholders even though the exercise price of the rights shares is above current market value.

About 98.5 percent of the proceeds of the rights issue will be used to finance the acquisition of Gallo Oil and the remaining 1.5 percent, or about Rp 150 billion, will go toward strengthening Bumi Modern's working capital, he said.

Bumi Modern, which is 52 percent owned by Bakrie Capital and 48 percent owned by the public, had 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 this year, compared to Rp 93 billion during the whole of 1998.

The company booked a net loss of Rp 5 million during the first six months of the year, compared to a net loss of Rp 29 million in 1998.

Also on Thursday, property concern PT Modernland Realty said it expected to complete a debt restructuring deal with the Indonesian Bank Restructuring Agency (IBRA) within the next three months.

"We hope to have our debts with IBRA converted into convertible bonds," company commissioner A.F. Hasan said.

Modernland owes a total of Rp 290 billion to banks controlled by IBRA.

The company also has US$35 million in outstanding debts to various noteholders. Hasan said the company was going to work out these debts soon. (udi)