Soraya Permatasari, Jakarta – The Indonesian Bank Restructuring Agency (IBRA) on Tuesday won its battle to oust the head of auto conglomerate Astra International, moving a step closer to the crucial sale of its 45 percent stake in the firm.

Investors at an extraordinary meeting called by IBRA to remove respected chief executive Rini Soewandi and finance director Dorys Herlambang said the reshuffle had been approved by 78.45 percent of shareholders represented at the meeting.

IBRA has put its stake in the automaker, Indonesia's largest, up for sale to help the government meet the hefty cost of bank recapitalisation in the current fiscal year to end-March. Failure to sell the stake in time would further disrupt the country's finances. IBRA's efforts to push through the sale are also seen by foreign investors as a test case of its ability to act decisively and get deals done.

Theodore Rachmat, who has been chief executive of the company before, was chosen to replace Soewandi. "Rachmat has to help the government's targets, including selling the 45 percent stake in Astra which is de facto controlled by the government," IBRA chief Cacuk Sudarijanto told reporters on the sidelines of a parliamentary hearing. "He is not new in Astra, he has the experience," Sudarijanto said, when asked why IBRA proposed Rachmat as Astra's new chief.

Stake sale delayed amid acrimony

IBRA announced last month that an investor group led by Gilbert Global Equity Partners (GGEP) and Newbridge Capital had been chosen as the preferred bidder for its stake with an offer of 3,750 rupiah per share.

But negotiations with Astra's management turned increasingly acrimonious. Astra refused to answer hundreds of detailed questions from GGEP/Newbridge, saying the information requested was sensitive and could be used by competitors. The investor group accused Astra of withholding information and blocking due diligence, and said Astra's actions could scare off other foreign investors.

Meanwhile, other bidders emerged for the stake. IBRA last week threw bidding open, removing the preferred status of GGEP/Newbridge. IBRA says it has received five bids, including a bid of 4,000 rupiah per share by France-based Lazard Freres & Co and its advisers, Credit Lyonnais Securities Asia. Analysts say a change of Astra's management should speed IBRA's efforts to sell the stake. Rachmat is expected to be cooperative in expediting the sale. IBRA hopes to announce the winning bidder on March 25.

Analysts said the change of management would not mark a major change of direction in Astra's strategy. The company's shares ended morning trade up 100 rupiah or 2.6 percent at 3,925 rupiah. But Soewandi may not be ready to give up the fight. She is well regarded by the market, considered one of Indonesia's most able managers and is politically well-connected. If she chooses to fight, she could drum up significant political support, analysts say.

But with IBRA's new chairman Cacuk enjoying the personal backing of President Abdurrahman Wahid, the agency will be better able to withstand the conflicting political pressures it faces.

Stake sale a test case

IBRA's success in selling the Astra stake, one of the jewels in its portfolio, is seen as a crucial test of its ability to speed up asset sales and push deals through in the face of opposition from vested interests and some political groups.

The agency is Indonesia's most powerful economic entity. It controls some 600 trillion rupiah ($80 billion) in equity and debt and is central to the most fundamental objectives facing Indonesia – rebuilding the banking sector, restructuring the country's massive debt burden and attracting investors.

The agency styles itself as a "one stop shop" for foreign investors – it controls assets in almost every sector of the economy and aims to sell them off over coming years.

But last year's acrimonious scrapping of agreements between IBRA and Standard Chartered, which had been selected to manage and invest in Bank Bali, raised question marks about the agency's credibility. If the Astra sale, too, is botched, analysts say few investors will want to come shopping at IBRA.