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Wednesday, December 9, 2009

Stock price of secondary offering without any regulation

as published in Bisnis Indonesia daily newspaper
Wednesday, 09/12/2009 00:00 WIB
Stock price of secondary offering without any regulation

JAKARTA: The Capital Market and Finance Institution Supervisory Agency (Bapepam-LK) plans not to regulate the stock price on secondary offering.

Chief of Bapepam-LK Fuad Rahmany said it could not restrict the new stock price in the secondary offering without HMETD in case of the absence of market players demand.

"We could make regulation only when it is proposed by the market player. We have given chances until today (yesterday). Hopefully we could deliberate it tomorrow (today)," he said yesterday.

Bapepam-LK has collected input from market players for the revision of regulation No. IX.D.4 on secondary offering.

The regulation does not at all regulate any price restriction for the issued stock.

Without any regulation on the stock price, emitters planning for secondary offering without HMETD have have the rights to set the price. It also happens to the scheme made by PT Bumi Resources Tbk for similar action.

The mining emitter has chance to have rights issue up to 1.94 billion shares at maximum.

If it is done, China Investment Corporation (CIC) which has just lent US$1.9 billion funds to Bumi Resources could buy 1.94 billion rights issue of the emitter.

Research head of PT BNI Securities Norico Gaman said it'd better for Bapepam to define the stock price as it would potentially harm the former shareholders.

In case of Bumi Resources, almost all indications show CIC will serve as the standby buyer that will become the shareholder of the company.

The action might decline the composition of other shareholders possession particularly the infinite numbers of retail investors. (Bisnis/21/ags)



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