Bakrieland Development, which operates in the property sector, is dealing with its own retail investors, who fear that — like their Bakrie Group peers — their net worth will further decrease.

The property developer plans to conduct a reverse stock split with a 10:1 ratio, in which 10 stocks will be converted into one stock. The move would increase the price per share tenfold, from Rp 50 (less than 1 US cent) per stock to Rp 500.

However, Hidayat, one of Bakrieland Development’s retail investors, pointed out on Friday that, based on the experience of other Bakrie companies, reverse stock splits did not tend to go well.

In previous cases, the stock price continued to decrease, meaning that investors’ net worth declined even further.

“The [stock] price of PT Energi Mega Persada [Bakrie group’s oil and gas subsidiary] dropped by 77 percent only three months after a reverse stock split in July 2017,” he said during Bakrieland Development’s public expose in Jakarta on Friday.

Hidayat also pointed to the stock price of Bakrie Sumatera Plantations, which dropped by more than half after a reverse stock split February 2017.

Bakrie and Brothers, a subsidiary focusing on manufacturing and infrastructure, also saw its stocks suspended recently after a 86 percent drop.

The Indonesia Stock Exchange (IDX) suspended on June 8 the trading of Bakrie and Brothers’ stocks for a cooling down period that lasted until June 20.

After the suspension was released, however, the company’s stock price dropped further to Rp 70, prompting the bourse to put a lock on trade yet again — but this time, until further notice.

According to Hamdi Hassyarbaini, IDX transaction monitoring and compliance director, Bakrie and Brothers must hold a press conference on Tuesday to explain to the public its current condition.

Separately, MNC Sekuritas head of research Edwin Sebayang said Bakrie Group companies were still struggling with good corporate governance (GCG) and prolonged debt restructuration.

And with Bank Indonesia (BI) increasing its rate, this was not a good time to invest in debt-riddled companies, he added.

“After the reverse stock split, when the [stock] price is tradeable again, investors will make a bid to pull out [their investment],” he said. “When the price drops to Rp 50 again, investors will be stuck.”

Rp 50 per stock is the lowest price allowed for regular markets, according to IDX regulations. Usually, after reaching the Rp 50 floor price, stocks are unable to bounce as no investors would want to bid on the stock at a higher price.

Bakrieland president director Ambono Janurianto said the reverse stock split was part of the company’s debt restructuring program, as it still had Rp 1.8 trillion in outstanding debts, with a plan to restructure Rp 300 billion this year.

To do so, he said the company obtained a Rp 500 billion loan from investment company PT Geo Link Indonesia, which is secured by Bakrieland stock ownership in PT Graha Andrasentra Propertindo. Bakrieland owns 38.76 percent of Graha Andrasentra Propertindo through its subsidiary PT Surya Global Nusantara.

Bakrieland also issued 2.52 billion warrants to its creditor related to the restructuring. If exercised, one warrant can be converted into 10 stocks at the price of Rp 100 per stock.

“Our creditor wanted the stock price at marketable level, that is why we have to do the reverse stock split,” Ambono said, adding that otherwise, the company would not be able to restructure its debts.

“If [the reverse stock split] fails, we have to file a debt postponement petition [PKPU] to the court and that would be bad for the company and investors,” he said.

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