Drama at Indonesian Food Processing Company Tiga Pilar Sejahtera Food

Based on the results of Tiga Pilar Sejahtera Food's latest General Meeting of Shareholders, which was conducted on Friday (27/07), the following decisions were taken:

• The company's 2017 annual report is rejected (for now) as several commissionaires refused to sign it.
• The auditor of Tiga Pilar Sejahtera Food's financial reports will be replaced.
• Tiga Pilar Sejahtera Food's Board of Directors has been dissolved and its tasks will temporarily be taken over by the Board of Commissioners.
• The Board of Commissioners will organize an Extraordinary General Meeting Of Shareholders within the next 90 days. In this meeting a new Board of Directors will be appointed.

Several commissionaires of Tiga Pilar Sejahtera Food (allegedly two) refused to sign the company's 2017 annual report because there are questions about a number of transactions and acquisitions worth more than IDR 2 trillion (approx. USD $138 million).

The key issue is that Tiga Pilar Sejahtera Food failed to meet its debt obligations related to the company's bonds that were issued in 2013 (and as a result the Indonesia Stock Exchange has suspended trading in shares of the company since 5 July 2018). However, despite its debt woes Tiga Pilar Sejahtera Food recently acquired two companies - JOM Prawarsa Indonesia and Jaya Mas - both of which are affiliated to (and reportedly majority-owned by) Tiga Pilar Sejahtera Food President Director Joko Mogoginta.

Shareholders are concerned about the company's stance on good corporate governance as it preferred to use funds to acquire two companies instead of meeting its debt obligations.

When it was decided at the General Meeting of Shareholders that Tiga Pilar Sejahtera Food's Board of Directors would be replaced Mogoginta walked out of the meeting. He told journalists that President Commissioner Anton Apriyantono and TPS Food Commissioner Jaka Prasetya (who is also managing director of private equity at KKR & Co. Inc., an investment firm that has a minority stake in Tiga Pilar Sejahtera) teamed up to have the board of directors replaced by not approving the financial reports of Tiga Pilar Sejahtera. Therefore, he calls it a "hostile takeover".

It is not the first time Tiga Pilar Sejahtera encounters problems in the recent past. In mid-2017 a factory owned by its subsidiary Indo Beras Unggul was raided and sealed by authorities following allegations of fraud. Reportedly Indo Beras Unggul secretly replaced premium rice by the lower quality subsidized rice and then sold it on the market as if it were premium rice. This scandal caused a big decline in shares of Tiga Pilar Sejahtera.

So far this year shares of Tiga Pilar Sejahtera are down 64.71 percent to IDR 168 a piece. Since 5 July 2018 trading has been suspended and it is unknown when trading can be resumed.

Stock Quote Tiga Pilar Sejahtera:

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