PGN may sell additional 15% stake after IPO

The process of the initial public offering (IPO) of the state-owned gas utility company PT Perusahaan Gas Negara (PGN) will be, probably, followed by a maximum of 15 percent stake of green shoe option and 5 percent of the red shoe, Bisnis Indonesia newspaper reported in a front page story on Wednesday.

“We have plans to go for a 15% green shoe and 5% red shoe options in connection with the PGN's IPO. But we are still consulting with the office of the state minister of state enterprises regarding the source of these extra shares,” PGN’s president director W.M.P. Simanjuntak told Bisnis on the sidelines of a seminar organized by the Indonesian Petroleum Association (IPA) in Jakarta on Tuesday.

Green shoe is an allotment option in which a company can sell additional shares to the public after its shares were listed on a stock exchange if offer was oversubscribed during the IPO process.

As far as red shoe is concerned, it is an order option in which a company can offer its additional shares during the period between the last date of the offer and the date of allotment of shares.

PGN plans to hold the IPO between November 12 and November 14. It expects to raise up to Rp 3.6 trillion or about US$400 million from the sales of its 30 percent stake from the IPO.

"If the book value of PGN reaches Rp 12 trillion, the value of the 30 percent shares that will be sold in the IPO would reach Rp 3.6 trillion. We are sure the book value of the company would be around Rp 12 trillion," said Simanjuntak last week.

PGN hopes that it could retain a half of the proceeds from the sale of the 30 percent shares to finance its expansion plan and to give the remaining 50 percent to the government's coffers.

The government has appointed PT Danareksa Sekuritas, ABN Amro-Rothschild and Credit Suisse Boston as underwriters of PGN's IPO. The percentage of the shares to be sold in the IPO has not officially been announced although PGN estimates that it would be around 30 percent.

Meanwhile, PGN has set a net profit target of Rp 300 billion to Rp 400 billion for 2003, Investor Indonesia reported on Wednesday.

It is in line with the company’s work plan and the 2003 budget. “There is nothing special about it (net profit target).PGN’s net profit will be around RP 300 billion to Rp 400 billion,” the company’s commissioner Sumarno Surono told Investor at the office of the state minister of state enterprises in Jakarta on Tuesday.

PGN also said its revenue this year is expected to rise to RP 8.4 trillion (US$997 million) from RP 4.2 trillion in 2002 due to higher gas sales. (*)