Feb 28, 2011

IDX rejects Sierad Produce reverse stock

Indonesia Stock Exchange (IDX) has rejected a proposed reverse stock plan of PT Sierad Produce Tbk (SIPD) since the authority saw the corporate action has not yet needed by the company.
“We see there is no urgency for Sieard to hold reverse stock and also its track record has been one of our considerations to ban the plan, one of them is reverse stock plan has been done by the company before,” said Director of Listing of Indonesia Stock Exchange (IDX) Eddy Sugito this afternoon. He also said that the company has submitted the plan to the market authority.
The reverse stock previously would modify the nominal of A-series stock which was Rp395 to Rp3,950, then also change B-series stock from Rp395 to Rp3,950 and C-series stocks from Rp100 to Rp1,000.
Eddy also said that IDX saw the action has negative implications to the company share which is now under execution, since the company announced the reverse stock plan in the end of last January.
Based on the data of PT Sierad Produce (SIPD-coded stock), the price of the stock has been corrected to drop to Rp50, its lowest level in the stock market, from the level of Rp64 on January 27. Now, the stock was at the level of Rp54. The stock price has managed to its peak at the level of Rp83 on November 22.
The nominal price of the company had been reversed in 2004 with the same ratio. The company also had restructured its converted bonds and long-term debt by issuing C-series stocks in 2005.
In the end of 2009, the company executed reorganization quasi and declined the share value of series A and B stocks from Rp5,000 and Rp3,000 to Rp395.
Eddy also said that any listed company that has announced reverse stock plan, generally will have negatively responds from investors since it will absorb liquidity in the market due to the fewer number of shares in the capital market.
According to him, the company has not submitted any interest to add its capital with preemptive rights after the reverse stock held.
“The talk did not lead to that way [rights issue].”
Corporate Secretary of Sierad Elies Lestari did not answer the phone call and did not also reply short message when trying to find confirmation on the cancellation of the corporate action plan. However, last month, Elies postponed of extraordinary general meeting of shareholders.

Disclosure: No position at the stock mentioned above.  

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