Indonesian cigarette maker PT Bentoel Internasional Investama Tbk (RMBA), a member of British American Tobacco Group, is raising Rp 13.99 trillion ($1.06 billion) through the biggest rights issue deal this year. The proceeds will be used to pay off its debts to Rothmans Far east B.V amounting to Rp 12 trillion ($912 million).
Bentoel Internasional said it plans to issue 29.16 billions of new shares, or about 80.1% of the enlarged capital, at a price of Rp480 each. Under the scheme, a shareholder of 36 share units will be eligible for 145 Rights shares.
“The company’s majority shareholder British American Tobacco (BAT) Ltd is acting as standby buyer, and will purchase up to 4.2 billion new shares not taken up under the rights issue,” said the management of Bentoel Internasional in a statement on Monday.
Bentoel Internasional’s revenues climbed 16 per cent to Rp 16.81 trillion in 2015 from Rp 14.07 trillion in 2014, while net income improved from a loss of Rp 2.25 trillion to a smaller loss of Rp 1.64 trillion. The surge is propelled by the firm’s Dunhill Fine Cut Filter, which contributed Rp 5.6 trillion to the total revenue.
Bentoel Internasional is the fourth largest cigarette manufacturer in Indonesia with approximately 7% market share. The company manufactures and markets a diverse range of tobacco products – machine-made kretek, hand-made kretek and white cigarettes.
Last year, PT HM Sampoerna Tbk (HMSP) , a unit of US cigarette producer Philip Morris International Inc., raised Rp 20.34 trillion ($1.39 billion) from the sale of 264.2 million units of new shares or 7.50 per cent of the total paid-up capital through rights issue.
Also Read: Philip Morris’ Indonesian unit to raise $1.39b via rights issue
HM Sampoerna set its rights issue price at Rp 77,000 per share, at the top end of the offer price range Rp 65,000 to 77,000, according to a filing on Indonesia Stock Exchange.
The rights issue was launched aiming at increasing free-float shares as required by the Indonesian Stock Exchange (IDX). The exchange required all companies listed on the board to have a free-float shares of at least 7.5 percent by the end of January 2016. The rule has been effective since January 2014 but listed companies were given a two-year grace period to adjust with the new rule.