Sat, 25 Mar 2000

Singapore's CCL wins Astra stake

JAKARTA (JP): An investor consortium led by Singapore's automotive distributor Cycle & Carriage Ltd. (CCL) finally won on Friday the bid for the Indonesian Bank Restructuring Agency's (IBRA) 39.5 percent stake (1.02 billion shares) in publicly listed PT Astra International.

The winning consortium will buy all of IBRA's 1.02 billion Astra shares at Rp 3,700 per share, providing the agency with some US$506 million in cash, based on the Rp 7,460 rate used for the deal.

"This is a landmark transaction for Indonesia. This is also IBRA's largest transaction (so far)," IBRA chairman Cacuk Sudarijanto said at a news conference after announcing the winner.

"The price was the only consideration in picking the winner," he added.

The CCL consortium includes Batavia Investment Management Ltd., Lazard Asia Fund, a unit of Lazard Freres, PT Bhakti Investama and the Government of Singapore Investment Corp.

CCL will be the largest investor with an estimated 23 percent stake in Astra.

The consortium outbid the U.S. Newbridge Capital-led consortium which included Chase Asia Equity Partners, PT Nusantara Investment Fund, Batavia Investment Fund and PT Saratoga Investama Sedaya, a company partly owned by Edwin Soeryajaya, the son of Astra's founder, William Soeryajaya.

Cacuk declined to mention the price offered by the second bidder. "They offered a price lower than Rp 3,700."

But a source said that the Newbridge consortium offered Rp 3,600 per share.

Many had earlier expected that Newbridge would win the bid, particularly as it had offered Rp 3,750 in an attempt last December to buy Astra.

Cacuk sidestepped a question as to why IBRA could only get Rp 3,700 for the Astra shares, saying, "To IBRA this (Rp 3,700) is already the best price."

Separately, IBRA senior vice chairman Arwin Rasyid said that for the government the Rp 3,700 price was an "upside value" considering that the average market value of Astra in February was about Rp 3,600 per share.

Cacuk stressed that the completion of the Astra transaction would send a positive signal to foreign investors that the government was serious about its asset disposal plans, and that Indonesia could conduct transactions in a transparent way.

IBRA holds some Rp 600 trillion worth of assets. The agency is targeted to raise about Rp 17 trillion in the current budget year ending this month, and almost Rp 19 trillion in the next April- December 2000 budget year. The proceeds will be used to aid the state budget.

Separately, CCL managing director Philip Eng said that the group intended to be a long-term investor in Astra.

"Cycle & Carriage is committed to serving as a long-term partner with Astra. We are confident of the prospects for Astra under its current management."

Eng added that he felt "comfortable" with current Astra president Theodore P. Rahmat, a nephew of William Soeryajaya, who lost the company in 1993 in a bid to repay the obligations of the family's bankrupt bank.

He asserted that the Soeryajaya family did not participate in the CCL consortium.

Eng declined to disclose his company's grand vision for Astra. "This will be developed over time as we develop our relationship with Astra and its management."

Asked why CCL decided to submit a joint bid with the Lazard Freres-led consortium, he said, "When two bidders joined together it definitely improved the chances of success. That's what we did and that's what we achieved."

CCL and Lazard Freres were shortlisted last month as two separate bidders.

CCL is a regional grouping with core businesses in motor vehicle distribution and retail, and property investment and development.

Since starting in 1951 with a Mercedes Benz franchise, CCL has grown to handle many franchises in six countries.

Equity analysts generally welcomed the entry of Cycle & Carriage into Astra.

PT SG Securities Indonesia's head of research Lin Che Wei said that CCL would create more value for Astra.

"The joining of Cycle & Carriage can very well be a value creation for Astra," Che Wei said.

PT Nomura Indonesia's head of research Goei Siauw Hong was not so enthusiastic about the synergy to be created between CCL and Astra, pointing out that the former was merely a car distributor company with its main operation in Singapore, a small business area.

"In Singapore, you may have control of the market with only two car outlets. It's not so here in Indonesia."

"But with Cycle & Carriage's controlling shareholders in Astra, they can apply stricter discipline to the management."

Goei was specifically disappointed with the price deal received by IBRA, pointing out that the Rp 3,700 price level was below the market price of between Rp 3,700 and Rp 3,800 before the deal was closed.

He said that a controlling investor should offer a 25 percent premium of the market value. (rei/udi)