Indonesian regulator says minority investors protected from Adaro legal battle
-- By Aloysius Bhui -- PADANG, West Sumatra (Thomson Financial) - Minority investors who purchased shares from Indonesia's biggest ever initial public offering (IPO) of PT Adaro Energy Tbk were well protected from a legal battle involving the company, officials said. Adaro Energy, which owns 61 percent stake in Indonesia's second biggest coal producer PT Adaro Indonesia, debuted on Indonesian stock exchange on Wednesday after raising $1.3 billion proceeds from last week's IPO. The IPO has been overshadowed by a prolonged legal battle between a former shareholder of Adaro Indonesia, Beckket Pte Ltd, and Deutsche Bank, regarding share ownership in the unit. "We decided to allow Adaro Energy to go public because the financial risk from the case was not so significant," Nur Haida, a bureau head at Indonesian capital market watchdog Bapepam-LK, told reporters in the West Sumatra provincial capital of Padang. She said such an opinion assumed that the disputed stake in Adaro Indonesia was just 5.8 percent, which means that Adaro Indonesia can still be consolidated into Adaro Energy if Beckkett wins the battle. However, she said the exact size of stake in dispute could be different to that claimed by Beckkett and therefore the financial implication of the case could be huge. But if that was the case, the minority shareholders were still protected. "We do not know exactly which is right. It (the stake) could be 40 percent or 51 percent," she said. Singapore-based Beckkett Pte Ltd had warned Adaro and other related parties allowing the IPO to go ahead, including Bapepam-LK, of legal consequences that may arise over the share ownership dispute. In September last year, Singapore's High Court dismissed a longstanding conspiracy claim against Deutsche Bank AG by Beckkett over the sale of stakes Adaro Indonesia, and a coal port, PT Indonesia Bulk Terminal (IBT). In 1997 Beckkett, owned by Indonesian businessmen Sukanto Tanoto and Hashim Djojohadikusumo, and its unit PT Asminco Bara Utama had used their 40 percent stake in Adaro and IBT as collateral to obtain a $100 million loan from Deutsche. But the bank then sold the Adaro stake to PT Dianlia Setyamutki for $46 million in 2002 after Asminco failed to repay its debt in the wake of the Asian financial crisis. Beckkett claimed the bank and Dianlia conspired on the sale as it was conducted without a public auction and the sale price was deemed too low. Beckkett said it had also filed an appeal with Singapore's Court of Appeal. It said it had sent a letter on June 27 to the Jakarta district court, demanding the court to order Bapepam-LK to stop the Adaro Energy IPO process. Tender offer Nur Haida said in the event that Beckkett wins the case that resulted in Adaro Energy losing its controlling stake in Adaro Indonesia, the minority shareholders should not worry about losing their shares. She said Adaro Energy will then make a tender offer to buy the shares owned by minority shareholders. Minority shareholders are defined as investors holding a stake of less than 5 percent. Separately, Indonesian Stock Exchange chairman Erry Firmansyah said it was worth noting that the case between Beckkett and Deutsche Bank had been decided by a Singapore court. "In my opinion, the case should not be brought to Indonesian court," he said. Exchange director Mohammad Sembiring said the worst-case scenario was that Adaro could be delisted. He, however, does not think that may happen "because legally we did nothing wrong". Adaro ended the morning session 2.9 percent lower at 1,650 rupiah.
