Jasa Marga IPO: Gov't appoints CIMB as fin advisor

Government has appointed CIMB-GK goh as the financial advisor for IPO of PT Jasa Marga. Under supporting advisors (legal, PR etc) have also been appointed. Pending approval is the lead underwriter. Two groups (Bahana-CSFB & Danareksa-Mandiri) are competing fiercely. Remember my previous post of a dinner few weeks ago when I overheard the conversation between the guys involved in the deal?

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Bahana-Credit Suisse underwrite Jasa Marga IPO

It's almost certain that PT Bahana Securities and Credit Suisse will underwrite what could be the largest privatization for SBY's adminitration, initial public offering of up to 30% shares of turnpike operator & developer PT Jasa Marga. I got an early clue of Bahana-Jasa Marga last night.

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Conflict over Jasa Marga

Privatization Committee led by Coordinating Minister for the Economy Boediono had decided to privatize toll road operator PT Jasa Marga this year through initial public offering (IPO). But VP Jusuf Kalla and other cabinet members asked Jasa Marga to drop the IPO plan and sell off its productive assets instead. How about that.

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Privatization of three SOEs

Market has been skeptical when it comes to privatization in the last few years. The only significant 'privatization' was the placement of 5% shares of PT Perusahaan Gas Negara (PGN) Tbk late last year after years of discourse. So, when MSOE Sugiharto claimed that three SOEs (Jasa Marga, BNI, and Wijaya Karya) will be privatized this first half, just reserve that for...

"OK, but we have four months left, pretty much time," said one of Sugiharto's staff at MSOE.
"How long will the approval process, especially to get the clearance from Privatization Committee and then the House of Representative?"
"Depends on how convincing is the government. But it could be weeks or months," he said.
"Given the fast-track approval, is it possible to privatize three SOEs in three months?"
"Why not? The market is there to absorb. Why are you so skeptical on privatization?"
"Because last week, among others, your ministry announced to postpone the privatization of nine companies scheduled this year. I understand you have 13 SOEs remain in the list of privatization this year. But with what's going on out there, I'm skeptical still."
"For the three SOEs mentioned, we're quite optimistic."
Well, let's see whether this time government could deliver.

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Harry Tanoe's maneuver at CMNP

Harry Tanoesoedibjo's PT Bhakti Investama Tbk bought 180.3 million shares (9.01%) of turnpike operator PT Citra Marga Nusaphala (CMNP) Tbk on the last trading day of 2006 at Rp1345/share, days after PT Jasa Marga announced its plan to offload almost 270 million shares of CMNP. On Dec 26, I posted the news about Jasa Marga's divestment. Initially I thought it's Tutut (Soeharto's daughter). "No, it's Harry Tanoe and Robby Sumampouw," a friend said. Robby's son Ievan Danar Sumampouw owned 5.13% shares as of Dec 31.

CMNP reported to JSX last week that as of Dec 31, Jasa Marga owns 17.78% shares, followed by UBS (7.2%), Redmington (5.23%), and Ievan Sumampouw (5.13%). On Jan 11, CMNP told JSX that as of Jan 3rd, Jasa Marga ownership reduced from 355.76 million shares to 352.56 million, and further declined to 84.57 million (4.23%) as of Jan 5. Jasa Marga divested the shares through bookbuilding, limited to less than 100 investors on Dec 26-27. No information available who bought the shares. Today its price jumped to Rp1580.

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Jasa Marga divests CMNP, Tutut's comeback ?

State-owned toll road operator PT Jasa Marga is leaving another toll road operator once controlled by Soeharto family, PT Citra Marga Nusaphala (CMNP) Tbk. The company is divesting its 17.79% shares (355 million units). Who is the buyer?

Jasa Marga is the single largest shareholder at CMNP followed by UBS AG (7.2%), Remington Gold Ltd (5.23%), and Mr Ievan Daniar Sumampouw (5.15%).
Early this month, Jasa Marga also divested 10% its shares in PT Citra Margatama Surabaya (CMS) to CMNP. CMS is building Surabaya Eastern Ring Road (SERR), a 12.7 km toll road with 35-year concession and investment of Rp1.39 trillion. CMNP controls 95% shares in the toll road to be commercially operated mid-2007.
The question, who is behind the buyer of Jasa Marga shares at CMNP?
Early this year, some newspapers disclosed a plan of Mrs Siti Hardiyanti Rukmana, eldest daughter of former president Soeharto, to regain control up to 55% shares of CMNP through a company named Crown Capital Global (CCG) with UBS' full support.
Under the scenario, CCG would collect up to 38% shares of various investors and then Jasa Marga's 17.79%.
In a letter to UBS AG dated December 19, 2005, Almington Assets Ltd (owned by Tutut's family) had pledged 11% shares of PT Bimantara Citra. And according to the latest list of Bimantara shareholders, UBS/Almington owns 10.85% shares but is not listed as controlling shareholder of Bimantara anymore.
Total value of Jasa Marga shares in CMNP is around Rp518.3 billion, while total value of UBS/Almington shares at Bimantara is around Rp1 trillion.
BTW, who is Ievan Daniar Sumampouw?

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PPA offloads Jasa Marga bonds

PT Perusahaan Pengelola Aset (PPA), a company established to manage assets left after the closure of Indonesia Bank Restructuring Agency (IBRA), has started the sale of two bonds issued by PT Jasa Marga for the Jakarta Outer Ring Road (JORR) project with combined outstanding of Rp440 billion. PT Indo Premier Securities, once linked to people close to MSOE Sugiharto, acts as selling agent and financial advisor for the offer.

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Counting the losses

As thousands of displaced people (due to hot mudflow from gas field operated by Lapindo Brantas Inc) went on protest yesterday for months of gross neglience over the promised compensation and 12 people killed in a gas pipeline burst in the area covered by Lapindo mud, we're increasingly bussy in counting the losses and yet we have no idea who will pay. Why don't establish an escrow account, funded by Bakrie (if that's the commitment) with tight independent supervision to underwrite the costs?

Some was cynical when Greenomics claimed the cost incurred of hot mudflow could be billions of US dollars calling the NGO of exagerating. Government then put the estimated cost of US$150 million till March 2007. This magic number is being used by Lapindo-related parties as the total liabilities in their hands over the disaster.
But look at the claims so far. PT Jasa Marga, the state-owned turnpike operator, stated today that the cost to build a new toll road in the area would be Rp1.5 trillion and no way the company would finance that. "Lapindo should bear the cost," said Frans Sutikno, CEO of Jasa Marga.
I'm afraid the state-owned railway operator PT Kereta Api Indonesia would spend billions of rupiah to re-route the track. And the residents who lost their land claimed compensation of Rp1 million/square meter. Millions of toll road users have been suffered huge mental problems and economic losses due to the closure of the turnpike.
Millions of cubic metres of hot mud has spewed from the site, flooding over 400 hectares, swallowing eight entire villages, hectares of rice paddy fields and numerous factories in East Java, and displacing more than 10,000 people.
The gas pipeline burst is apparently the worst so far, killing 12 innocent people and injured 16 others.
As reported by Tempointeraktif.com, state-owned gas distribution company PT PGN Tbk recorded billions of rupiah of losses in the last few days. At least 244 companies, 74 hotels, and 1,090 households got no gas supply due to the explosion.
Paper manufacturer PT Kertas Leces, a state-owned company, reported Rp500 million losses in two days only. Industrial gases producer PT Samator had to stop its hydrogen, hydrogen peroxide, and carbondioxide facilities with billions of rupiah of losses. Who will pay all of these? Can we just separate the pipeline burst from the mudflow? When would all of these going to end or an endless mess? Is it possible that the worst is yet to come?
On the other end, PT Energi Mega Persada (the parent company of Lapindo Brantas Inc) filed bad and good news late last week. The first, bad one, due to the pipeline burst, Energi had shutdown gas production in Kangean Block. The second, the same day of the explosion, EMP Kangean which operates the block, had successfully started oil production in Sepanjang Islands at the volume of 9,000 barrel per day (generating cash of USD450,000/day). These evenly announcements have resulted in stable price of Energi shares at Rp500. What an odd world we livin! When many people could only count losses, small number of people still manage to calculate the benefits!

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Lapindo disaster updates: 90 Days later!

May 29 was the first gas blast at Lapindo Brantas Inc's Banjar Panji-1 drilling well. Ninety days have passed, no clear signs of when the mudflow would gonna stop. Thousands of people have been forced to leave their homes, hundreds lost their jobs as some factories have been mud-covered, millions of USD tangible and intangible losses have been incurred. Yet, we have no idea what to do. Turnpike operator Jasa Marga had raised the level of toll road with Rp30 billion investment, but the mudflow keeps threathening the transportation infrastructure.

Lapindo's parent company PT Energi Mega Persada Tbk is very much bussy to answer capital market authority and investors on its planned merger with PT Bumi Resources Tbk. In a press release last week, Energi affirm the merger plan without a single word on the mudflow disaster.
But The Jakarta Post quoted Yuniwati Teryana, vice president and head of public relations at Lapindo claiming the company had spent US$70 million since May to deal with the disaster.
The Post wrote as follows:
The company did not provide a breakdown of expenditure, only saying the money was used to cover operational costs, including bringing in a well snubbing unit, a rig and other equipment used to try to stem the mud.

The result so far is big zero. Energi's investors deserved explanation on the costs aspect of the disaster.
Meanwhile, some geologists are trying to spin the issue. Take a look at the article published by Kompas today. The largest newspaper quoted geologists with conclusion that the increasing mudflow tend to proof that the disaster has something to do with mud volcano, a natural flow of mud. If that's true, Kompas wrote, no technology would able to stop the mudflow.
Geologist Andang Bachtiar is quoted as saying the mudflow has no more relationship with Banjar Panji-1 drilling well. But he quickly admitted that the mud volcano has been triggered by technical faults at Banjar Panji-1 drilling well. "Without the technical drilling fault, the mud volcano would not happen," Andang said.
But officials at energy minister declined to accept the theory pending on the full implementation of relief well technique, sometimes late October.

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Lapindo disaster updates: Counting the compensation!

Suarasurabaya.net reported Marine Commander Mayor General Safzen Nurdin gave donation to 125 marine families live at Tanggulangin Anggun Sejahtera housing complex which hit by mudflow from Lapindo Brantas Inc's drilling in Banjar Panji-1, Porong District, East Java ahead of a planned major rally to protest the disaster.

It's not clear how much money the general gave or the source of the fund. But Suarasurabaya.net quoted general Nurdin asking its member to be patient and not join the rally.
Meanwhile residents of Besuki Village ask Lapindo Brantas to buy their houses before the whole village sinking. More than 20 hectares of paddy fields in the village had been covered by mudflow.
Detik.com reported Lapindo has started to pay the wages of workers at plants that had stopped their operation due to the mudflow. Total amount is Rp2.35 billion. The company also would disburse Rp6.8 billion to relocate the factories.
A group of 17 NGOs criticized Lapindo's compensation package which consisted of offer to pay victim's house rental fee Rp2.5 million per year, moving fee of Rp500 thousand (US$50) and meals per month of Rp300 thousand (US$35).
East Java governor Imam Utomo ask the victims' willingness to sacrifice. What?
In another development, Kompas.com reported the state-owned turnpike operator PT Jasa Marga has started to raise the level of the Surabaya-Gempol route by 2.5 meters as there is no sign of the mudflow to end. The 2.2 km-long project would complete in 21 days. Make sure Lapindo underwrite the costs.
Starting tomorrow, Sidoarjo administration and the military will raise the embankment, deploying 1,000 military personels. "This is part of military's village development program." Again, make sure, the military is not misusing the state budget as village development program is a state-funded program. Except that military officers make money out of this disaster.

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