An interesting news spread out last week: The Deposit
Insurance Body [LPS] would permit purchase of 99 shares of PT Bank Mutiara Tbk [BClC] with recapitalization of bonds as long as the value
was equal to Government capital insertion of Rp.6.7 trillion. Bank Mutiara’s process of dive station would be re opened by next
year.
According to Mirza Adityaswara, Executive Head of LPS, he was willing to receive
payment from candidate investors who ware using fund of bond recapitalization
to buy Bank Mutiara’s shares. To buy shares with
bond recapitalization was not a new discourse because it was thrown before in
the process of selling Bank Mutiara since two years
ago. The point was that LPS was opening talks to discuss means of payment
provided that the value remained to be Rp6.7 trillion.
So LPS would permit purchase of 99% of shares of PT Bank
Mutiara Tbk [BClC] with bond
recapitalization as long as the value was the same of Government’s capital
inclusion of Rp7.7 trillion. This option was to be re-offered next year.
It was mentioned that LPS was obliged to comply with the
Regulation which stipulated that price of Bank Mutiara selling must be in accordance with Government’s
bridging fund. In this case LPS’s interest was to comply to due diligence on
candidate buyers in accordance with the per-requirements set by LPS and Bank
Indonesia.
Word was out that thanks to its bettered performance,
the market value of Bank Mandiri had reach three
times of its present equity value. Equity of Bank Mutiara up to July 2012 was Rp1.108 trillion and was predicted
to become Rp1.136 trillion by end of year. Meanwhile total asset up to July had
reached Rp13.95 trillion with final target of Rp14.78 trillion.
Based on Bank‘s Business Plan [RBB] as elaborated by end
of 2013 company’s equity was predicated to reach Rp1.5 trillion. Increase of
equity was supported by prediction of company’s net profit by end of 2012 which
was predicted to reach Rp180 billion and by end of 2013 to reach Rp 3 trillion.
About the option of bank buying using recapitalization
bond, it would surely be advantageous to the Government, because we could sell Bank
Mutiara based on the price set forth by the Parliament, i.e. Rp
6.7 trillion. Furthermore to buy Bank Mutiara by using recap
bonds could also lessen interest burden to be paid by the Government.
Rumors were out that a number of banks which were still
holding recap bonds were persuaded to buy Bank Mutiara. This was done exactly during open IPO by deposit
insurance body next year; among them was PT Bank Mandiri Tbk.
Although the option of buying bank shares might use
recap bonds, ideally and politics wise the House as legislative body should be
consulted. The reason was because in the past recap bonds pipelines to problematic
banks was also solved by joint political decision between the Government and
House.
Some notes to be set forth was Firstly, the use of recap
bonds was best to be prioritized for buying banks which were in the process of
“release” by the Government. Secondly, the use of recap bonds using the type of
bonds the yield of which was rated as also that profit of buyer bank was not
reduced.
Thirdly, the type of bonds to be used as medium of
transaction by calculating the bond’s due date. In this case the bonds whose
due date was still a long way to go, for example 2030. Fourthly, calculation of intrinsic value and market value of bonds being used as medium of
transaction must be done rightly so it would not only fulfill buying value of
Rp6.7 trillion, but also to enlighten Government’s burden of interest coupons
and bonds.
Lastly,
the discourse on option of bank buying by using underlying transaction in the
form of recap bonds must be followed up by economical, fiscal, legal and
political analysis so things without
rising legal disputes in time to come.
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