State companies spend less on share buybacks; PGN, Semen Gresik to continue buying

The Jakarta Post ,  Jakarta   |  Thu, 01/15/2009 11:51 AM  |  Business

Publicly listed state-run companies have so far spent much less than originally targeted on the share buyback program.

The program, initiated by President Susilo Bambang Yudhoyono, was aimed at helping to stabilize the capital market, preventing company shares from being heavily undervalued after the October 2008 stock market collapse.

According to the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK), state companies have spent less than 20 percent of the funds which they had allocated for buyback purposes as of Jan. 7.

This low spending was partly due to the unexpected need to hold cash to avoid being hit by liquidity shortages, for example when encountering problems while seeking short-term loans due to the impact of the global liquidity crisis.

Ten publicly-listed state companies had allocated more than Rp 6 trillion (US$500 million) between them to purchase back their shares from investors following the October stock market collapse.

The program ended Tuesday, with cement maker PT Semen Gresik and gas distributor PT Perusahaan Gas Negara (PGN) have thus far conveyed their intention to continue the program, while mining company PT Aneka Tambang says it refuses to do so. Seven remaining companies are still undecided. Semen Gresik and PGN are seeking to extend their share buyback program this year as they have spent far less than the funds allocated for the purchase.

State Minister for State Enterprises Sofyan Djalil said Tuesday the firms had informed him of the plan and would soon seek shareholder approval again.

As of Jan. 7, PGN and Semen Gresik only spent Rp 2.5 billion and Rp 192.68 billion respectively to buy back their shares. Shares of state firms have devalued by an average of 20 percent since the October stock market collapse.

Aside from state firms, 32 other publicly-listed companies have planned to buyback their shares starting in October. From a total of Rp 22.17 trillion allocated by the companies, only Rp 1.76 trillion were realized as of Jan. 7.  (hwa)

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