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Yawadwipa Companies Expresses Interest in Strategic Acquisition of Mutiara Bank

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Strategic Interest in Mutiara Bank Formally Communicated

JAKARTA and SINGAPORE, Feb. 6, 2012 /PRNewswire-Asia/ —

Key Messages:

— 100% Cash Acquisition With or Without Well-Capitalized Bank
— Further Financial Support to Boost Capital Ratios to Industry
— Independent and Growth Enhancing Solution With No Political
— Commend Mutiara and LPS on Advancements and Restoring Trust
— Protracted Process Risks Destroying Progress To-Date

Yawadwipa Companies (“Yawadwipa” or the “Company”) announced today that it has formally communicated to the financial advisors of PT Bank Mutiara Tbk (“Mutiara” or the “Bank”), its strategic interest in an acquisition of the Bank from the Indonesian Deposit Insurance Agency (“LPS”). As stipulated by existing law (Article 42 of Law No. 24/2004), the purchase price currently may be no less than LPS’s 2008 temporary capital placement into Mutiara, which was approximately Rp 6.7 trillion, or at spot exchange rates, roughly $750 million USD (the “Rescue Price”). Whether in partnership with a well-capitalized institution committed to Indonesia or on a standalone basis, Yawadwipa is prepared to assess the merits of acquiring 100% of Mutiara for the Rescue Price while also providing a direct equity injection to improve capital ratios and accelerate growth, subject to due diligence and other customary process matters. Yawadwipa looks forward to discussing the strategic interest in the Bank with a variety of constituencies in the public and private sectors.

As was outlined upon its formation, Yawadwipa’s overarching mission is to develop the leading merchant bank for Indonesia and do so through a collaborative and partnership approach. To aspire to be the most integral independent domestic financial services entity to the country comes with it substantial responsibility and a long-term approach to any business endeavor. While a profit making business with a fiduciary obligation to deliver the highest quality earnings to its investor set, the Company fully accepts and embraces its duty to play an active role in helping facilitate public sector initiatives and advance social causes. Its past advice on policy matters, continuous interaction with leading decision makers and its formalized agreement to contribute 10% of its profits to local charitable and similar efforts, are evidence of this commitment.

Yawadwipa believes the Mutiara platform consists of many attractive businesses and has proven itself an innovator while restoring trust over the past three years. It has achieved strong results in the face of extraordinary internal and external pressures, which is a testament to the management team and the public sector’s oversight of the institution formerly known as Bank Century. Exemplary deposit and loan growth, a material reduction in non-performing assets and a solidified equity position are tangible evidence of these efforts. Nevertheless, in the face of global headwinds and a significant slowing of asset recoveries, the short term prospects for Mutiara are more tempered and substantial changes in book value and other valuation benchmark statistics are unlikely to occur within the legally allowed Rescue Price period of three years plus two one-year extensions. As reported on January 18, the Bank expects profits to fall 62% this year to approximately Rp. 180 billion, largely by virtue of substantially more limited asset recovery income.

Yawadwipa’s multi-faceted business model uniquely positions it to provide Mutiara the benefits of an expansion strategy that will result in domestic job creation and business growth, and private equity capital and the know-how of seasoned investment professionals to most effectively capture market opportunities. Private equity as an industry has played a significant role in the evolution of capital markets, but more importantly it has been the transactional solution to a number of troubled or contentious financial services situations throughout the world in the past decade. In 2002, a consortium of private equity (Farallon Capital) and a local partner (Djarum Group) successfully acquired BCA from the government, with BCA since growing to become a most highly valued depository institution in Indonesia. Consistent with the BCA consortium, Yawadwipa will work with LPS and other parties to address any and all concerns that may be associated with private equity, pooled capital or consortium ownership and may leverage certain key persons involved in the 2002 BCA process.

The Company will attempt to harness whatever resources necessary to assist LPS and others achieve a sensible and satisfactory divestiture of Mutiara in a timely manner. The team’s collective experience in a substantial number of complex financial services transactions over a lengthy period of time, coupled with its local knowledge and relationships likely makes Yawadwipa a logical part of any Bank solution. Yawadwipa welcomes the opportunity to evaluate Mutiara thoroughly if so afforded by LPS, and commit to being a constructive and additive partner in the process. It is Yawadwipa’s hope that a matter continuing to play out quite publicly and at times overshadowing the material advancements in eradicating poor business behaviors, can be supplanted by positive news of a favorable Mutiara transaction.

Specific to Mutiara’s history and certain legacy and ongoing facts and circumstances, Yawadwipa is less sensitive than financial institutions with deeply entrenched market positions or established and differing operating procedures. Further, in combination with our to-be-named advisors, Yawadwipa is relatively advanced at dealing with many of the issues that continue to linger, having worked through similar matters in the past. Nonetheless, Yawadwipa has no illusions that consummating a transaction will be uncomplicated or achieved without the combined efforts of a number of parties, some with potentially competing agendas. As evidenced by the unresolved Mutiara sale process in 2011, a simple and straightforward solution, no matter the macro, sector and/or company-specific environment, is challenging. The global economic situation by most accounts has not improved since the last auction, which leads us to conclude that if this process is to be a success, new participants, strong cooperation and pragmatism, and structural innovation are needed.

Yawadwipa’s decision to convey strategic interest in Mutiara is not without reservation. Yawadwipa’s interest, either directly or indirectly, is predicated on assurances of a transparent and efficient process. Yawadwipa has limited interest in devoting substantial effort to a highly complex situation that will inevitably slow other initiatives, potentially including the Java Fund, if political grandstanding and bureaucracy impede a constructive and sensible solution. Financial institutions at their core are built on trust and reputation. Another process failure or a protracted resolution risks disenfranchising the loyal customers and employees that helped resurrect Mutiara. Yawadwipa has no political agenda or ties nor does it express a view concerning the government’s 2008 decision to support Bank Century. Yawadwipa simply encourages an efficient process that allows LPS to monetize its position in Mutiara in a timely manner, on the most advantageous terms, and absent political rhetoric.

Contact Information:

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SOURCE Yawadwipa Companies

Written by asiafreshnews

February 7, 2012 at 10:07 am

Posted in Business & Finance

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