PTBA spends Rp 133.5b to buy back shares
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State-owned coal mining company PT Bukit Asam (PTBA) spent Rp 133.5 billion (US$14 million) last month on buying back its shares from the public to sustain its share valuation amid bearish market
According to the company’s disclosure to the Indonesian Stock Exchange (IDX) on Tuesday, the company managed to purchase 9.68 million shares from May 21 to June 28 with an average price of Rp 14,618 apiece.
The highest price for the given period was Rp 16,325 apiece on May 21 and the lowest at Rp 13,135. The average price was lower than PTBA’s closing price on Tuesday at Rp 15,400 apiece, up by 1.31 percent compared to a day earlier at Rp 15,200 apiece.
“As approved in last December’s shareholders meeting, we bought back shares to anticipate the expected crisis this year. We built momentum in May when our shares started to decline to a level of Rp 16,000 from a previous level of around Rp 18,000,” PTBA’s corporate secretary said.
The Jakarta Composite Index (JCI) reached its highest level of 4,219 on May 3 but then started to go down as negative sentiments over the European debt crisis persisted. The benchmark index touched the lowest point of 3,654 on June 4. The index started to stand above the psychological level of 4,000 on Tuesday.
Meanwhile, shares in PTBA touched the highest point this year at Rp 21,000 on Feb. 17 while the lowest level was Rp 13,150 on June 5. The company’s shares have plunged 11 percent so far this year from the closing price of Rp 17,350m on Jan 2.
PTBA has time to perform a share buyback within 18 months after it obtained approval last December. The company is planning to take back 2.3 billion shares within that period. The shares will be kept as treasury stocks.
According to Hananto, PTBA has appointed PT Danarekasa Sekuritas to arrange the share buyback. PTBA has set aside Rp 2.04 trillion, mainly funded by its retained earnings, to support the plan. At the end of June, PTBA’s remaining funds for the buyback stood at Rp 1.9 trillion.
Hananto said that PTBA might halt the buyback as the market had just started to regain some of the ground it had lost.
“If the index continues to climb, we will just halt the buyback. As approved in the shareholders meeting, it’s okay if we don’t carry out the buyback if the national, regional and global markets improve,” Hananto said.
He recalled that PTBA had also performed a shares buyback in 2008 when the capital market was hit by the global crisis following the fall of Lehman Brothers.
“We performed the shares buyback when our shares’ price was around Rp 4,000 in 2008. We then sold the stocks in 2009 when the market got better, leading to a massive increase in our funds,”
According to its financial report, PTBA has Rp 6.79 trillion in cash and a cash equivalent at the end of last March.