Divestment Price of BNI IDR2,200-IDR2,450

The offering price of 30% shares of Bank Negara Indonesia Tbk during the government's divestment program will be around IDR2,20-IDR2,450 per share, a discount of 9.18% to yesterday closing price.

With such assumption, the government would be able to generate IDR3.3 trillion - IDR3.67 trillion. But the offering price still subject to change as it has not been approved by SOE Minister Sofyan A Djalil.

My data shows that the minimum revenue from the offering will be IDR8.7 trillion, IDR4.2 trillion of which will go to the bank to strengthen the capital, and the rest will go to the state budget of 2007.

The transfer to the state budget of 2007 would increase from the previous target of IDR3.3 trillion to the present target of IDR4.7 trillion from the sales of 1.5 billion stocks. In the meantime the government will sell additional shares of 1.9 billion units it has got from rights issue.

It means the government will get some profit as the rights issue price was IDR2,025 per unit.
If the government could sell the stocks at the price of IDR2,450, it would get the additional revenues of IDR839.18 billion.

It means that if the rights issued and the divestment will be at IDR2,450, the transfer to the state budget would be IDR4.51 trillion, lower than the target of IDR4.7 trillion. It will come from IDR3.67 trillion and IDR839.18 billion.

The bank's business plan shows that the bank's capital adequacy ratio could be 20%.
If BNI disburses new loan of IDR1 trillion, the bank's capital adequacy ratio will decline by 0.15%, while to increase the CAR by one percentage point it should get additional capital of IDR909 billion. The bank needs additional capital of IDR4.48 trillion this year.

On the rights issue BNI set the price of IDR2,025 per unit. Investors owning 20 units of stock may buy three new units. Initially the privatization target is IDR3.3 trillion, but it has been revised to IDR4.3 trillion, and later to IDR4.7 trillion.