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Medco to buy back shares worth $3m amid market rout
Oil company Medco Energi Internasional plans to buy back US$3 million in shares over the next four months.
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A worker inspects an oil pipeline in this file photo (JP/Ricky Yudhistira)
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il and gas company PT Medco Energi Internasional plans to buy back its shares following a regulation by the Financial Services Authority (OJK) that relaxes shares buyback regulations to cushion stock market falls.
The publicly listed company is looking to buy back 1 percent of its shares and allocating US$3 million for such a corporate action. The buyback will be carried out from March 16 to June 16, according to a letter submitted to the OJK on Monday.
In the letter, Medco said it would buy back the shares using internal funds and assured shareholders the buyback would not affect operations "because the company has sufficient working capital and cash flow.”
Read also: SOEs set aside up to Rp 8 trillion to buy back shares amid falling prices
Medco’s latest financial report shows the company booked profits of $19.27 million in the Jan-Sept period last year. The company had turned around a $11.08 million loss booked in the same period the previous year. The turnaround was due to Medco's acquisition of London-based oil and gas company Ophir Energy.
The OJK together with the Indonesia Stock Exchange (IDX) have announced policies in a bid to anchor falling stocks as foreign investors dump Indonesian assets. The OJK has allowed share buybacks without a prior shareholders meeting and told the IDX to limit share drops to 7 percent for all price ranges, from the previous 10 percent, and scrapped pre-opening trading to safeguard the domestic market from steep drops.
The Jakarta Composite Index (JCI), the IDX main gauge, freefell 10.75 percent last week amid a global market rout caused by the worldwide spread of the COVID-19 outbreak. The JCI plunged 4.4 percent after falling 2.7 percent at the opening session on Monday. Meanwhile, Medco stocks, traded on the stock exchange under the code MEDC, fell almost 7 percent.
