Second bidder shows interest in IBRA's Astra stake

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)