WIKA Continues Its Second Stage of Buyback Program in the Total Sum Of IDR. 112 Billion
PT Wijaya Karya (Persero) Tbk (Indonesian Stock Exchange Code: WIKA), the most growing infrastructure company in Indonesia, Tuesday, (27/1) succeeds in acquiring approval from its shareholders in an Extraordinary Shareholders’ General Assembly to conduct its second stage of the buyback program with the funding allocation in the sum of Rp. 112.31 billion. The funding is the remainder of the first stage of the buyback program which was enacted by this corporation since three months ago; Rp. 140 billion.
The program is aimed to support price stabilization and support investors’ trust in the market that WIKA’s stocks are still undervalued and constantly sought after. The buyback program also provides flexibility in managing capital to achieve more efficient capital structure and decrease the overall cost as well as increasing earnings per share (EPS) which will maximize the shareholders’ wealth).
“We still possess a buyback funding in the amount of Rp. 112.31 billion which will be allocated to the second stage of the buyback program. We believe that the program will run effectively since, after the program started, WIKA’s share always outperforms that of IHSG’s. This program is aimed to provide confidence to the shareholders on the performance of WIKA’s share.” Bintang Perbowo, WIKA’s President Director said to the media in Jakarta (27/1) during the press conference.
The buyback fund is taken from WIKA’s internal cash. The utilization of buyback fund in the period of 13 October 2008 to 13 Januari 2009 is Rp 27.69 billon used to buyback 143,279,000 shares which is equivalent to 2.45% of the total capital share. The shareholders have agreed upon the continuation of the buyback program and the commencement will be reported in the next Shareholders’ General Assembly.
The assembly also agrees to convert the surplus of the IPO funding as working capital where the decision is based on the following considerations:
- Increasing the effectiveness of working capital where IPO fund’s utilizing process can take place speedier and more flexible compared to short-term bank loan utilization.
- The usage of IPO’s fund as working capital is hoped to generate faster turnover so that higher return can be achieved compared with placing the fund in bank deposit.
- The diversion of this fund into working capital is a managerial strategy to continue the original investment plans by responding to the changing external conditions.
WIKA’s management and its shareholders in the today’s Extraordinary Shareholders’ General Assembly agree to the diversion of unabsorbed IPO’s fund to the structure of working capital and the development of corporate and subsidiaries’ businesses. The reason is flexible fund utilization and capital efficiency which can maximize shareholders’ value where the expected return is hoped greater than placing the fund in a bank.
From the sum of Rp 307,159,000,000 allocated for the corporation’s working capital, some is utilized for the working capital of WIKA’s subsidiaries through shareholders’ loan in the amount of Rp 100 billion.
According to the prospectus, the IPO’s fund is in the total of Rp 759,587,000,000 and after the approval of the General Assembly, the positions are as follows:
The Utilization Table of Fund Generated by IPO, Before and After the Extraordinary Shareholders’ General Assembly (ESGA), 27 January 2009
| Prospectus | ESGAâ??s Decision | |
| Reinforcement of domestic projectsâ?? working capital structure | 20% or Rp 152 billion | 57.63% or Rp 437,587 billion |
| Development of overseas construction endeavours and EPC | 40% or Rp 304 billion | 40% or Rp 304 billion |
| Investment and development of infrastructure projects | 40% or Rp 303.587 billion
|
2.37% or Rp 18 billion
|
Since the IPO, the allocation of the fund is in the position of Rp 452,427,000,000 or 59.56% from the total of IPO’s total yield. The surplus is in the position of Rp 307,159,000,000.
The utilized fund as of 31 December 2008 is as follows:
- The entire fund allocated for working capital, in the amount of Rp. 151,971,400,000 has been fully absorbed.
- The absorbed allocated fund for overseas construction and EPC projects is Rp 282,427,000,000. The remainder of the fund comes from the project of PLTU II Sulut 2x25MW, which is an electricity generating project where WIKA conducted EPC activities. The total fund absorbed by PLTU II Sulut is in the amount of Rp 147,427,000,000 or 87% of the total planned IPO.
- The fund allocated for investment and infrastructure project development has been absorbed in the sum of Rp 18,000,000,000 or 5.93% of the total fund utilization which all of which is in toll road investment in Java.
This IPO fund’s change is due to investment process and toll road development as well as IPP project which still need to takes place longer than previously estimation.
“This shareholders’ decision provides more flexibility of funding and business utilization to WIKA. We can provide economical source of funding coming from our internal cash to our subsidiaries and conduct organic and non-organic development with the available resources so that we can transform challenges into opportunities in 2009. In the future development, WIKA is still targeting to become investors in several projects such as toll, IPP, and others profitable investment opportunities” Bintang Perbowo closes his explanation.