Second bidder shows interest in IBRA's Astra stake

JAKARTA (JP): A second bidder has emerged for the stake that the Indonesian Bank Restructuring Agency (IBRA) holds in Astra International as the new chief of the agency pushes ahead with his controversial proposal to replace current Astra management.

IBRA head Cacuk Sudarijanto told a news conference on Wednesday that the agency, as the owner of 40 percent of Astra, would press for the replacement of the Rini Soewandi-led management because of what he called their uncooperative attitude towards an IBRA deal with a Newbridge/Gilbert investor consortium.

IBRA last month chose, without an open tender, an American investor consortium led by Newbridge Capital and Gilbert Global Equity Partners as the preferred bidder for its 40 percent stake in Astra.

But the process of the transaction was obstructed by what Cacuk considered uncooperative management on the part of the present Astra management towards Newbridge/Gilbert.

The second bidder, supported by a respected blue chip financial investor, offers a speedy solution to the current difficulties in closing the sale, according to Dow Jones Newswires on Wednesday.

According to a letter sent by Credit Lyonnais Securities (Asia) Ltd. to the head of IBRA, the unnamed investor would pay a premium to IBRA's minimum stated price of Rp 3,750 (US$0.52) per share for the 40 percent stake in the auto maker.

The letter, a copy of which was obtained by Dow Jones Newswires, noted the difficulty in pressing ahead with a firm bid given IBRA's move to name the U.S. consortium of Newbridge Capital and Gilbert Global Equity Partners as the preferred bidder for the stake in Astra.

"The only obstacle to our client making a firm offer and proceeding with a transaction... is the current uncertainty as to the disposal process," Richard Taylor, Credit Lyonnais Securities managing director, wrote in the letter.

According to the CLSA letter, its client isn't purely a financial investor, like the Newbridge consortium, "but would take an active and cooperative role in driving the company forward in the new millennium."

CLSA also said the transaction process would be fair and accountable.

"The eyes of the world are on Indonesia in general and this transaction in particular and a transparent sale process would send a clear signal to the international investment community that... IBRA is an organization people can do business with," the letter continued.

Cacuk said on Wednesday that IBRA was under pressure to meet its target of raising Rp 17 trillion for the state budget and that the sale of Astra shares was expected to contribute a good portion of the total.

Advisor to the head of IBRA, Amir Sambodo, expressed his confidence that the current management of Astra would be replaced at the company's extraordinary shareholders meeting scheduled for Feb. 8.

"The current management of Astra will definitely be replaced," Amir said.

He added that the agency had prepared a team to take over the Astra management but he declined to elaborate.

Transparency

Astra management has denied charges that it is obstructing IBRA's sale of Astra shares, explaining that it has only asked for transparency in the transaction and conformity with the laws of the securities market as enforced by the Capital Market Supervisory Agency (Bapepam).

Astra also rejected the allegations made on Dec. 22 by Newbridge/Gilbert that management was obstructing the due diligence it conducted as part of its deal with IBRA.

Astra executives dismissed the charges, saying the investor consortium only obtained legal clearance on Dec. 15 from Bapepam to conduct due diligence.

"The Indonesian securities watchdog (Bapepam) confirmed IBRA as an insider party (significant shareholder) of Astra only on Dec. 15," Rini has said.

She argued that without being an insider party or shareholder with at least a 20 percent stake, IBRA or Newbridge/Gilbert is not allowed under the securities laws to obtain inside and proprietary information from Astra.

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

Astra also questioned the many benefits and advantages given to Newbridge/Gilbert as a preferred bidder while the investor group had not made any upfront payment to support its commitment to buy Astra shares.

"The Newbridge consortium's right to match any higher bid may discourage other interested investors from making an offer," a securities analyst has commented.

Astra has suggested that IBRA sell its take in two phases, the first one covering less than 20 percent to avoid the compulsory open tender.

The Astra share price is expected to rise after the entry of new investors, after which IBRA could sell its remaining stake at much higher prices and thereby gain more revenue.

But IBRA seems under tremendous pressure to meet its revenue target suggesting its Astra stake is the only jewel among the Rp 600 trillion of assets (equities and bad debts) the agency currently controls.

The agreement between IBRA and Newbridge/Gilbert stipulates that the investor group will pay only Rp 3,000 for Astra shares, and that they can buy less than 30 percent. The price will rise to between Rp 3,750 and Rp 3,825 if the acquisition reaches more than 30 percent.

An analyst here argued that the clause is much in favor of the American investor consortium as they can opt for buying less than 30 percent, having to pay only Rp 3,000 per share versus the current market valuation of over Rp 3,800 per share.

Stranger still, Newbridge/Gilbert are entitled to a compensation of up to $1.5 million if the planned transaction fails to be closed. (udi)