- Published: September 7, 2022
- Updated: September 7, 2022
- Language: English
- Downloads: 24
Analysis of Adaro’s IPO case ANALYSYS Before we answer the question from the title, let’s analyze all the data collected from some media to see how significant shareholder have to bear the risk if the court decided to win Beckett in share dispute, if PT. Adaro convicted the transfer pricing issue and from royalty issue. First we will look dispute which happen since 2002 after the transactions between Deutsche with PT Akabiluru for shares of Swabara in Asminco; Deutsche with PT Dianlia Setyamukti for Asminco shares at PT. Adaro; Deutsche with PT Dianlia for Asminco shares at Indonesia Bulk Terminal (IBT). The media stated that the agreement was described, that the transaction should be in public and Beckett lawyer insisted that according to UU 1155 KUHPerdata (1).
(Exhibit 2) The transaction should be done in public. I would agree that the transcation should not have done in private selling and Beckkett should have been informed before Deustche Bank proceed the transaction. Tthis would give transparancy and fair postition to all parties and this dispute will not happen. However since the transaction happen already, we will have to wait the court decision after all the evidences from both side presented.
According to Bapepam statement in the media, PT. Dianlia owned 40% shares which was owned by Beckett, however after ATA added their wonership in PT. Adaro Indonesia to 60%, PT. Dianlia share dilute to only 5, 84%. From the additional shares, ADRO shares in Adaro Indonesia became 65, 84%.
If eventually Court decides to win Beckett case, PT. Dianlia ownership would be transfered to Beckkett and the ownership changed is only 5. 84% which is not significant. This case would be different if te dispute will make Adaro Energy losses PT. Adaro Indonesia.
*11 From Gatra article regarding the investigation of PT. Adaro Transfer pricing and with the documentations evidence presented by its source, the authoriry should have immediate evaluation and investigation of the truth by placing an independent external auditor to proof it, compare the coal selling price of PT. Adaro to Indonesia Coal Index (ICI), or evaluate all the contract with Coal Trade, because the lower selling price compare to the Indonesia Coal Index could happen if the contract is stated particular price for certain years, The six companies have defended their decision not to pay the royalties, citing that the government has not reimbursed them for value-added tax (VAT) as they are required to do under the contract. *12 To settle the dispute, the government and the companies have agreed to return to the first-generation contracts of work. However, the settlement is pending the Development Financial Comptroller’s (BPKP) verification of the sums of the outstanding royalties and VAT reimbursements. *13 According to MSCI’s report, (exhibit 4), MSCI Barra is a leading provider of investment decision support tools to investment institutions worldwide.
MSCI Barra products include indices and portfolio risk and performance analytics for use in managing equity, fixed income and multi-asset class portfolios, from its conference call with CFO of PT. Adaro, says: “ The CFO explained the transfer pricing issue and the tax shortfall amounting US$83m that Adaro has to pay to the tax office. The shortfall, basically, come from two sources, 1) lower-than-market price for coal sales to affiliated trading company, Coaltrade, and 2) non-tax-deductible interest on US$920m borrowings for LBO. The tax office stated that coal mining companies are not allowed to sell their output, at below market price, to affiliated trading companies.
The tax office stated that the maximum price difference allowed is only 5%. The company has already paid US$44m and will pay the remaining balance before the end of this year. He also mentioned that there should be no income tax issue in the future as Adaro has fully met its tax obligations”. CONCLUSION Referring to analysis and information presented above, BAPEPAM LK had evaluated and investigate the PT. Adaro documentation and found that the financial risk is not significant.
Even if an adverse court ruling it would not cause substantive harm to Adaro because the dispute share is now only 5, 84%, therefore I am stand with Bapepam by releasing Adaro listed the IPO, after all the evaluation had been done instead of waiting for all the dispute and issues. ADARO has publically disclosed the dispute and the worst case if unable to resolve, the risk is getting bigger, Bapepam would have many questions and investors would be less likely to invest with such a dispute hanging over the company. If eventually they didn’t fully disclose, they could be subject to criminal penalties. For the transfer pricing and royalty dispute, the company has fully aware of its duty to pay the tax. By releasing Adaro’s IPO, Bapepam is giving a chance to this company for expanding its company and operation, making state earns more money from tax needs to pay by PT. Adaro and helping shareholders earn more money from increased stock price which has been rose over 50% from the first time they released the IPO.
Like most things, it is buyer beware. PT. Adaro has fully discloses all problem within the company (exhibit 3), the authority had already evaluated, requested and investigated all the information, now it is the investor’s responsibility to decide whether the company is worth factoring that in. If the investor still thinks it is worth something or is just betting that it will come out the right way, it is their decision.
It is only about full disclosure and the market decides the value of the information. But then Bapepam as authority who controls and supervises the market to create organized capital market activities and to protect shareholders and public interest needs to always evaluate and investigate thoroughly if there is a potential that could defraud investors.
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