Medco will also buy founders? shares in buy back plan

PT Medco Energy Corporation will also buy shares from its majority shareholders or founders in its second buy-back plan, Koran Tempo daily reported on Tuesday.

The company?s director Sugihartono said in Jakarta on Monday that Medco would allocate about Rp 264 billion buy back shares both from majority shareholders or from the investing public through the regular market.

?The buy back plan will also include the purchase of shares from founders or majority shareholders,? he said in a response to media report charging that the company?s buy-back plan would be part of its plan to dry out the ownership of the investing public in the company.

The purchase would be the second stage of the company?s buy-back. In the first buy-back program, the company spent about Rp 64 billion to buy its shares through the regular market.

Medco earlier said that the funds to support the second buy-back plan would be taken from part of the company?s net profit of Rp 572 billion booked in 2000.

Securities analysts have said that the company?s massive buy-back would eventually dry out all the company?s shares held by the investing public. According to them, the Rp 264 billion cash allocated for the buy-back financing are equal to the value of the company?s shares in the market.

Sugiharto said that it would be impossible for the company to ?go private? or to buy out all the shares in the market because the measure would be against the capital market regulation in which the share purchase in a buy-back program is limited only to a maximum of 10 percent of the shares circulating in the market. (*)