Perpustakaan Digital ITB

There are many honest and hard-working entrepreneurs in Indonesia, that built their giant business starting from a scratch. Among them are the founders and shareholders of PT ABC, a leading media, technology and telecommunication holding company in Indonesia. As a private company, all PT ABC‟s expansion are mostly financed by equity from its shareholders and some working capital loan from the bank. In March 2008, PT ABC acquired majority shares in a major media company. To finance its acquisition, PT ABC has issued warrants to and received payments in advance of the warrants from a foreign private equity funds, DEF Investment Ltd. (“DEF Investment”) and enter into Investors Agreement with DEF Investment to float PT ABC by Initial Public Offering (“IPO”) at latest by December 2009, whereby at that time, the warrant and advance payment of warrant from DEF Investment shall be converted into equity in PT ABC in the amount of 35.5% of total issued and paid up capital of PT ABC. However the shocking wave and impact from the sub-prime mortgage crisis in the United States have also bring implications to Indonesia. Liquidity is so tight and stock markets crash. Most people are paranoid to invest in stocks and paper assets. In this case, valuation and appraisal on assets in the form of shares become relatively low. In this condition, the shareholders of PT ABC need to make decision: (i) to honor their contractual agreements to procure PT ABC to go for IPO despite the relatively bad economic climate and issue new shares in the amount of 35.5% to DEF Investment; or (ii) default and ask for extension of time from DEF Investment considering obtaining new loan from other third party to pay loan to DEF Investmen in this economic condition is very difficult and costly. After considering the IPO option, business aspect and competitiveness side of the subsidiaries of PT ABC, especially the television company that has just been acquired (DAT TV) and its valuation, the shareholders of PT ABC opt for IPO option.