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The Indonesian capital market has long been in the doldrums but many companies are still interested in offering their shares or bonds to the public in capital markets to raise fresh funds. In fact the number of companies planning and making initial public offering on the Jakarta and Surabaya Stock Exchanges.

The capital market supervisory board (Bapepam) said in 2000, there were 26 companies launching IPO, up from 12 in the previous year. Similarly the number of companies floating bonds totaled 19 in 2000 up from 9 in 1999. Bapepam also recorded 15 other companies issuing rights shares and three listed banks restructuring their debts through stock exchange with share sales of Rp6.3 trillion.

In 2001 interest in going public is expected to remain strong as reflected by the number of companies planning IPO. PT Indosiar Visual Mandiri, a company operating a television broadcasting service, plans to go public early February.

The operator of Indosiar television station which started operation in 1995, will offer 298.4 million of its shares worth 15% of paid-up capital with a nominal value of Rp 250 per hare. The total share sales are estimated to reach Rp 74.6 billion.

Indosiar will also issue 59.7 million Waran Serie I to be given free to each holder of 500 new shares. A holder of 500 new shares will be given 100 Waran Serie I that will give right to holder to buy one new share for each Waran Serie I. Waran Serie I will be valid for 3 years.

The IPO is offered only to local investors in line with the Law No. 24 in 1997 on broadcasting. Foreign investors are not allowed to have shares in television station.

PT Holdiko, which is a holding company established by the Indonesian Bank Restructuring Agency (IBRA) for companies pledged by the Salim Group to repay its debt, may divest most or all of its listed shares in Indosiar. Indosiar is one of the subsidiaries pledged by the Salim Group to repay the debt of its bank, Bank Central Asia, to the government.

Indosiar has an authorized capital of Rp 1 trillion including Rp 422.7 billion in issued capital fully paid. Holdiko controls 67.4% of the shares. The remaining 32.6% are held by PT Prima Visualindo. After the IPO the share capital of Indosiar, issued and fully paid, will rise to Rp 497.3 billion and the shares of Holdiko will decline to 57.3% with Prima Visualindo holding 27.7% and investing public 15%.

Table-1 Share capital composition of PT Indosiar Visual Mandiri before and after IPO
 Before IPO

Description Total Nominal Portion
 share value (%)
 (mill. share) (Rp billion)

Authorized capital 4,000.0 1,000.0 --
Issued capital and
fully paid:
- PT Prima Visualindo 551.7 137.9 32.6
- Holdiko Perkasa 1,139.1 286.8 67.37
- Public 0 0 0
Issued and paid up
capital 1,690.8 422.7 100.00
Share capital in portfolio 2,309.2 577.3

 After IPO

Description Total Nominal Portion
 share value (%)
 (mill. share) (Rp billion)

Authorized capital 4,000.0 1,000.0 --
Issued capital and
fully paid:
- PT Prima Visualindo 551.7 137.9 27.74
- Holdiko Perkasa 1,139.1 284.8 57.26
- Public 298.4 74.6 15.00
Issued and paid up
capital 1,989.2 497.3 100.00
Share capital in portfolio 2,010.8 502.7

Note: IPO = Initial Public Offering;

Source: Data Consult

All to be used to finance capital good

Indosiar will use the entire fund its hopes to raise from the first phase of share sales in the ]PO to finance the procurement of capital goods. The first phase is expected to sell 187.9 million shares. If the entire 298.4 million new shares could be sold out, only around 67% of the fund would be used for the procurement of capital goods and the remaining 33% will be used to repay part of its debt. The fund raised from the conversion of Waran will be used to increase working capital.

Indosiar has a large long term debt. According to a statement issued by the company, it had a total debt of Rp 1.11 trillion by June, 2000 including Rp 199.9 billion in short term and Rp 879.7 billion in long term debts.

The major elements of its short term debt included Rp 85.8 billion in cost repayable and Rp 28.8 billion in operating debt. Major elements of its long term debt is "special ties debt" amounting to Rp 797.7 billion. Until the end of December, 2000, the special ties debt were estimated to decline through instalment and restructuring. It was reported on August 25, 2000, Indosiar repaid its loan amounting to Rp 22 billion to PT Holdiko Perkasa.

In addition, on Oct. 6, 2000, the management of Indosiar reached a restructuring agreement with Holdiko on the conversion of debt valued at Rp 372.7 billion into 26,616 shares with a nominal value of Rp 1 million per share. Under the IPO, with nominal value to be split into Rp 250 per share, there would be agio shares valued at Rp 346.1 billion to be distributed evenly among the shareholders.

The capitalization of debt and agio share will increase the ownership of Holdiko from 50% to 67.4%. After the conversion, the long term debt of Indosiar will be reduced to Rp 400 billion with an annual interest of 18% to be paid on the 25th every month. The management of Indosiar is also seeking to convert the remaining debt of Rp 400 billion to Holdiko and BNI, and Rp 33 billion to other banks or financial institutions. The goals are repayment to Holdiko (IBRA) and refinancing for the debt to BNI.

Starting making profit despite negative capital

In the past two years Indosiar has started reporting profit although it still suffered deficit in capital. The capital deficit badly affected its financial performance. The amount of its debt is the main adverse factor that has weakened the company in the past three years.

Late in June, 2000, its assets totaled Rp 605.5 billion with debt obligations amounting to Rp 1,079.5 billion - a minus capital of Rp 474 billion making it technically insolvent.

The company, relying on advertisement, has begun to post profit. In 1999, it reported a 100% rise in income and in 2000 its income was estimated to rise again. In the first half of 2000 it reported income reaching 76% of its total income in 1999.

The company was estimated to begin to post net profit after a loss of Rp 272 billion in 1998. In the first semester of 2000, its net profit was Rp 51.5 billion. Overall its financial performance was rated poor with a rentability of only 21.7% too small to provide a compensation for its investors.

Table - 2 Financial data of PT Indosiar Visual Mandiri, 1998 - 2000
 (Rp billion)

 Description 1998 1999 2000(*)

Total assets 524.0 556.5 605.5
Current assets 258.9 315.3 370.4
Receivables 66.7 132.8 169.8
Stock 108.4 111.6 120.8
Fixed assets 265.1 241.2 235.1
Liabilities 1,058.6 1,082.1 1,079.5
Short term liabilities 858.8 184.8 199.9
Long term liabilities 204.8 897.3 879.6
Debts in special ties 80.6 808.3 797.6
Equity (534.6) (525.6) (474.0)
Net income 152.5 313.4 237.6
Gross profit 39.2 137.2 117.4
Operating profit (18.2) 68.6 81.8
Net profit (loss) (271.7) 9.0 51.5
Ratio (%)
-Net profit/net income -178.19 2.86 21.69
-Net profit/total assets -51.86 1.61 8.51
-Current assets/current liabilities 22.67 158.69 178.54
-Liabilities/Total assets 202.02 194.45 178.28

(*) End of June;

Source: Data Consult
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Article Details
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Publication:Indonesian Commercial Newsletter
Article Type:Brief Article
Geographic Code:9INDO
Date:Jan 16, 2001

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