06 November 2008

Bakrie -- Will They or Won't They?


The Indonesian Stock Exchange (IDX) announced on Wednesday (5/11) that they were going to lift the suspension on trade that had been in effect on PT Bumi Resources. However, not long after this announcement was made, and presumably a few phone calls later, another announcement was made. The second announcement was that the suspension in trade would remain in force.

The issue is seemingly becoming less transparent and more complex. The press release issued by the Bakrie Group of Companies suggested that the deal was between Northstar and Bumi Resources with a number of SOEs also buying into the USD 1.3 deal. Word on the street is that the role of the SOEs is far from certain as is any stake they might take up. It seems that the current state of affairs is that there is a tentative deal in place for Northstar to provide finance.

In terms of the announcements, there are relieable sources suggesting that the current Coordinating Minister of Economic Affairs / Minister of Finance, Sri Mulyani, was in favour of lifting the suspension. This would suggest that the subsequent announcement to reinstate the suspension came from someone higher up the food chain. This would most likely be the President.

It is unlikely to be the Vice President. Simply, the more trouble Bakrie is in the easier it will be for Kalla to exert his influence over Golkar. It is reported that the current President ascended the top job in part because of funds supplied by Bakrie (this might explain the loyalty shown to one of cabinet's most poorly performing Ministers). The reality is that the deeper the hole Bakrie finds himself in the less likely it is that he can be King or Queen Maker in the upcoming elections.

Nevertheless, the mere fact that the government became involved in the lifting of the suspension is a loser in the "court of public opinion", as it will be seen as protecting the interests of a cabinet Minister and not about protecting the interests of the State. Whether this is true or not is irrelevant in the court of public opinion, if it smells bad and it looks bad, then it is bad! The fact that the presidential spokesman comes out and says that Bakrie companies are not his concern is hardly reassuring.

That said, the logic on keeping the suspension in place is that as soon as the suspension is lifted it is likely people holding Bumi shares will seek to offload even with a purported deal in place.

The deal between Northstar and Bakrie plus the SOEs is supposed to be complete within 28 days. I wonder whether the suspension will stay in place until the deal is signed, sealed, and delivered?

Ah, must be nice to be the Coordinating Minister of the Bakrie Family Welfare, oops I meant to say the Coordinating Minister of People's Welfare (photo -- always smiling and why wouldn't you be?).

9 comments:

GJ said...

Rob,
This does stink........it is all about Bakrie trying to keep control using state monies. The markets good or bad should be allowed to run their course. If trading started again then Bumi will find its level the people investing will decide. I might even become the owner if I had the money.

schmerly said...

Yea gj this stinks of the old KKN!

Rob Baiton said...

GJ...

It definitely has the potential to get even stinkier still! If you list on the market then you gotta be up for taking the good with the bad, business is business.

If yo wait a while you might just have enough money to buy the lot.

Schmerly...

The interesting part is there has been talk of the SOEs getting in, but as far as I know they are not in the deal yet.

If they do get in then there is State money involved and as such this conceivably could have KPK involvement to make sure the deal is transparent and clean.

schmerly said...

Rob..

I hope the KPK do get involved, from what I see they seem to be doing quite a good job winkling out the criminals that have robbed this country and it’s people, mind you I think they tend to tread a bit lightly when getting close to SBY’s cronies, which is a bit disturbing, but who knows it’s early days yet and at least Indonesia now has the KPK which is a step in the right direction.

schmerly said...

Rob..

Just been looking at the picture of beaming Bakrie AKA arrogant Aburizal, he reminds me of all the bad that went on before when the old man was running the show with his arrogant brats!

treespotter said...

they would have to announce a tender offer before any deal can close, nobody in their right mind would do a tender offer unless they know they'll get the right price. The right price won't be a happy price.

if you read the post carefully, then you'll get each of the clause in the deal - i'm pretty sure i got them just right :)

schmerly said...

Rob..

I see one of the Bakrie’s old buddies is in the news again, non other than young Tommy himself! (From the JP)

The Attorney General's Office has lifted a travel ban on the youngest son of late former president Soeharto, Tommy Soeharto, after declaring him innocent of the charge of embezzling state funds.

"We lifted the travel ban because we've stopped investigating the case," AGO spokesperson Jasman Pandjaitan told reporters Friday.

Tommy was accused of using state funds for personal purposes. His company, Clove Marketing and Buffer Agency (BPPC), acquired loan funds from Bank Indonesia between 1991 and 1998.

He has been barred from going abroad since 2007.

Prior to Jasman's announcement, Tommy made an appearance at the AGO to sign an official dossier which marked the end of the investigation in the embezzlement case.

(and to hand over a large brown envelope!! this is just me being facetious!)

Jasman added that BPPC had returned all of the loans and accrued interest amounting to Rp 900.7 billion (US$83.8 million) in 2005.

(Never mind Tommy it was a nice little earner while it lasted.)

Rob Baiton said...

Tree...

While the shares are suspended it makes for interesting argument regarding what the market is prepared to set as the bottom out price for Bumi shares.

Perhaps the thinking is that any deal that gets in place will in some way support the share price once the suspension is lifted.

The back room deal-making will leave a bad taste in the mouths of the public. I would have figured this would need to be one of those transactions that must be subject to intense scrutiny and one where it is better to be fully frank in terms of explaining the deal to those not directly involved, the public.

Perception is a powerful weapon. This is why justice must not only be seen to be done but must be done. The perceived conflicts of interest in this transaction will add to the demands of the public to be better informed of the intricacies of the process.

Rob Baiton said...

Schmerly...

Like it or not, if the investigation is over and that was the reason for the ban, then the ban has to be lifted.