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Thursday, May 27, 2010

Bakrie Stocks Rebound: Directorate General of Taxation Continues with Investigation into Kaltim Prima Coal

Thursday, 27/05/2010 00:00 WIB
Bakrie Stocks Rebound: Directorate General of Taxation Continues with Investigation into Kaltim Prima Coal

Irvin Avriano A.
Bisnis Indonesia

JAKARTA: Only two days after the Supreme Court repudiated the appeal made by the Directorate General of Taxation concerning the investigation into the case of PT Kaltim Prima Coal (KPC), the Bakrie Group stocks rebounded.

Bumi stock surged 19.88% to IDR2,050, PT Bakrie and Brothers Plc jumped 23.08% to IDR64, PT Energi Mega Persada Plc stock soared 52% to IDR114, PT Darma Henwa Plc stock rose 38.33% to IDR83, PT Bakrie Telecom Plc climbed 9.92% to IDR144, PT Bakrie Sumatra Plantations skyrocketed by 29.63% to IDR350, and PT Bakrieland Development Plc moved up by 19.33% to IDR142.

Lanang Trihardian, an analyst at PT Syailendra Capital, revealed the Bakrie Group stocks rebounded because investors had got certainty about Bumi's corporate action plan.

The holding company of KPC, PT Bumi Resources Plc, announced its plan to conduct non-preemptive rights issue on May 24, the same day the Supreme Court issued its ruling.

The plan will be included in the agenda of the Extraordinary Shareholders General Meeting (RUPSLB) held on June 24. According to the plan, Bumi would issue new shares to convert some of its US$500 million's worth of debt.

Based on Bapepam-LK regulation on non-preemptive rights issue, publicly listed companies could issue new shares maximum 10% of equities to, among others, improve the company's financial position.

Referring to the regulation, Bumi can issue up to 1.94 billion shares of the total 19.40 billion shares.

Senior Vice President-Investor Relations of Bumi Dileep Srivastava informed the company this year targeted to reduce its total debt of US$3.4 billion by US$1 billion. Half of the debt cut would be made by converting debt into equities for strategic investors.

"We have informed the agenda [equity increase] to the regulator yesterday. This is the first step of the series of debt cut in 12 months, just like we have announced to the market and the public."

Head of the Real Sector Corporate Finance Assessment Bureau Chief of Bapepam-LK Anis Baridwan confirmed the agenda of Bumi's RUPSLB. He also confirmed the terms and requirements in the non-preemptive rights would be looser than those in rights issue since the former aimed at making it easier for publicly listed companies to make corporate action.

Despite constant denial, many market players believe the non-preemptive rights were part of the conversion of US$1.9 billion's worth of debt that Bumi received from China Investment Corporation (CIC) in September 2009.

One executive at the Bakrie Group who prefers anonymity confided that CIC would enter Bumi as part of a strategic partnership after the Chinese state-owned investment manager disbursed its loan.

CIC will also enter Bumi's business unit, namely PT Bumi Resources Mineral, through the initial public offering (IPO) in the second semester of this year, estimated to invest US$200 million-US$250 million.

Following the recent prices, the total market cap of the Bakrie Group stocks jumped IDR11.69 trillion to IDR63.78 trillion. The Bakrie group traded 10.29 million shares worth IDR1.27 trillion or equivalent to 18% of the total transaction of IDR6.77 trillion on Indonesia Stock Exchange (BEI) yesterday.

The Bakrie Group stock rebounds, together with other rebounds, such as Astra stock one, bolstered Composite Stock Index (IHSG) by 7.27% to 2,696.78. The 7.27% increase is the 18-month high.

Public Share Dilution
Although the new shares would only offered to strategic investors, one analyst viewed the upcoming non-preemptive rights would dilute public shares by maximum 10%. "This [the corporate action] can be considered normal since Bumi has enormous liabilities."

The executive added the delay in the debt-to-equity conversion through non-preemptive rights was attributable to the tax cases of Bumi and its subsidiaries, KPC and PT Arutmin Indonesia.

Before the RUPSLB agenda was announced on Monday night, Bumi stock was under pressure from massive sales on speculation over rights issue. The new share was touted to sell for IDR1,400, eroding the share price from IDR2,425 on May 18 to IDR1,710 on Tuesday.

After the share price plummeted, brokers Sinarmas Sekuritas and Danatama Makmur aggressively bought the shares of the largest national coal producer and export. During May 24-25, Sinarmas spent IDR455.01 billion on Bumi shares, while Danatama IDR75.44 billion. Pressures to sell alleviated, bolstering Bumi share price by 19.88% or IDR340 to IDR2,050.

When asked for confirmation about the possibility of BEI conducting an investigation into the suspicion of information leakage in Bumi's corporate action, Director of Supervision and Compliance of Bourse Members at BEI Uriep Budhi Prasetyo didn't answer to his phone or reply to text message sent.

In the meantime, the Directorate General of Taxation stated it would not terminate the investigation into the alleged tax crime committed by KPC despite the Supreme Court's ruling repudiating the appeal to the case.

Director of Intelligence and Investigation at the Directorate General of Taxation Pontas Pane disclosed the Supreme Court's ruling would not affect the investigation process since the Directorate General of Taxation previously had won the pre-trial lawsuit made by KPC.

Pontas explained the Supreme Court's ruling was only related to the administrative process in issuing the order letter for the examination of preliminary evidences against KPC.

On May 24, the Supreme Court repudiated the Directorate General of Taxation's appeal to a ruling canceling the examination of preliminary evidences against KPC. The Taxation Court ordered the examination on December 8, 2009.

President Director of KPC Endang Ruchiat exposed different interpretations of tax problems curbing the largest coal producer would be left to law enforcers, such as police and the Attorney General's Office to settle. "We only comply with the existing regulations."

A politician from the Golkar party Priyo Budi Santoso denied there was intervention in the trial conducted by the Directorate General of Taxation against KPC.

"This has nothing to do with the Joint Secretariat. There is no intervention. Golkar's hands are tied to interfere with the legal process."

Chairperson of the Golkar party Aburizal Bakrie currently serves as Executive Chairperson of the Joint Secretariat of the Government-Supporting Coalition. The creation of the secretariat took place nearly at the same time with the resignation of Sri Mulyani Indrawati from her Minister of Finance post. Yesterday, Sri Mulyani left Indonesia to occupy her new post as the World Bank Executive Director in Washington D.C.

Soekotjo Soeparto, the Coordinator for Inter-Institutional Relations at the Judicial Commission, said the commission would prioritize studying the ruling on the KPC case. "We will prioritize the case if the plenary meeting approves it." (Bisnis/pul/ts/08/iaa/rar/nti/aca/asa/jao/bsi/ea)



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