Medco sounding out possibility of dual listing

Oil and gas company PT Medco Energy International Tbk is sounding out a possibility to dual-list its stocks in an international stock exchange, such as those in London, New York or Sydney in a bid to boost the value of its stock market prices.

Medco's corporate secretary and director of finance, Sugiharto, said that Medco, currently listed on the Jakarta Stock Exchange (JSX), revealed that the dual listing plan was currently under scrutiny by the management.

"Maybe in London, New York, and Sydney. But it is still being studied. And this will depend on a number of factors such as timing and pricing that both are out of the management's control," he said.

Sugiharto noted that the dual-listing of Medco stocks was expected to boost the market value or market price of the stocks. He noted that Medco stocks on the JSX were currently very undervalued compared to the company's fundamentals.

To cite an example, he said that when international crude oil prices rose to over $30 per barrel, Medco stocks remained stagnant.

"This differs with the stock prices of Gulf Resources whose stocks are also listed on the New York Stock Exchange. So, there is something wrong with a mechanism on the JSX," he said.

Nevertheless, Sugiharto noted that Medco stock prices performed better than the market's average. "With our prices staying at a range of Rp 900 to Rp 1050 per share, in fact Medco stocks actually perform enough and stay above the JSX's average index performance."

Sugiharto also dismissed market rumors that said Credit Suisse

First Boston (CSFB) would soon unlock its ownership in Medco. He described the rumors as unwarranted fear among investors.

He noted that even other foreign investors gave positive response to the company's recent road shows in Singapore and Hong Kong. "They even said that the amount of Medco's stocks available in the market was too small, only 14 percent, and therefore they wanted Medco to increase its free-float stocks."

But it would depend on the prices of the stocks. If the prices were attractive enough, the remaining shareholders would likely float more stocks to the market. But if the prices continued to be undervalued, the shareholders had instructed the company's management, at an extraordinary shareholders meeting, to buy back the stocks from the market.

The management was authorized to buy back stocks worth up to Rp 86 billion within 12 months period, if Medco stock prices continued to stay below Rp 2,000 per share.

Nevertheless, Sugiharto revealed that the management had not exercised fully its authority to buy back the stocks. "We have bought back only a little amount of shares."

The majority shareholder of Medco is New Links Energy Ltd., a joint venture company based on Cayman Island, owned jointly by CSFB and the Arifin Panigoro family. New Links ownership in Medco rose to 85.44 percent as of Dec. 6. 2000 after it bought 586.91 million shares from other shareholders. (*)