Agricultural biotechnology company PT Bumi Teknokultura Unggul Tbk (BTEK) has cut down the size its planned rights issue from Rp5.5 trillion ( $413 million ) to Rp 4.8 trillion ( $359 million ). Meanwhile, debt-ridden Bakrie Group plans to offer part of its shares to three creditors in a debt for equity swap.
Bumi Teknokultura cuts down rights issue
The firm has announced that it would offer 4.8 billion shares instead of 5.5 billion, but still at a price of Rp1,000 each. It plans to acquire a cacao plant in Serang, Indonesia, with new stocks and cash from the rights issue.
The cacao plant is owned by PT Golden Harvest Cocoa Indonesia (GHCI), a unit of Denmark-owned Golden Harvest Cocoa Ltd (GHCL). To pay for the acquisition, Bumi Teknokultura will give new shares not taken up by shareholders to GHCL.
Management of Bumi Teknokultura explained that the action will then allow GHCL to absorb between 21.28 per cent to 80.83 per cent shares of Bumi Teknokultura’s enlarged capital, making it the new controller of the company.
“We believe that the transaction will strengthen the company’s capital structure, as well as subsidiary portfolio that will give positive contribution to all stakeholders,” the management said in a statement.
“This is one of our strategies of increasing competitiveness in the challenging industry. GHCL will be the company’s main source of income after the acquisition.”
Shareholders will be given the rights to participate with a one to five conversion ratio. If shareholders do not take up the shares, their ownership will be diluted as much as 83.33 per cent.
Bumi Teknokultura claimed GHCI is one of the biggest cacaos producers in Indonesia. Its products – cocoa butter and cocoa cake – are exported to Europe and the US. GHCI owns a cacao plant that consists of a 65,675 square meter building on a 178,822 square meter land.
Currenty, PT ASABRI owns 18.13 per cent stakes in Bumi Teknokultura. Edi Suwarno Al Jap Sing holds 5.53 per cent, while public owns 76.34 per cent.
Bakrie Group debt-to-equity swap
PT Bakrie & Brothers Tbk (BNBR) or Bakrie Group said it planned to offer part of its shares to creditors Mitsubishi Corporation, Glencore International, and Eurofa Capital Investment in a debt for equity swap. This is part of the company’s efforts to restructure $453 million worth of debt through mandatory convertible bonds (MCB).
The company owes Mitsubishi $150 million, Glencore $200 million, and Eurofa Capital $103 million.
Bakrie & Brothers chief investor relation officer Indra Ginting said the company is still to calculate the number of shares that will be swapped in these deals. However, the number will most likely exceed the amount of shares that were offered to five other creditors last week.
“Negotiations with the three creditors are still ongoing. There is a possibility that we will use the mechanism of convertible bond again,” said Indra in Jakarta recently.
Last week, Bakrie & Brothers issued IDR 990.7 billion (approx $74 million) worth of mandatory convertible bonds to restructure its debt obligations to Daley Capital (IDR 430.4 billion), Interventures Capital Ltd (IDR 373.8 billion), Smart Treasure Ltd (IDR 90.8 billion), Harus Capital Ltd ($6 million), and Maybank Kim Eng Securities (IDR 14.7 billion).
The company converted a total of 19.8 billion shares (17.45 per cent of Bakrie & Brothers paid up capital) at Rp 50 a piece. Creditors can convert the bonds into shares in the next five years, on every 15 June or 15 December of the year.
Indra added that the swap will lower the company’s debt position and liabilities. As of March 2016, Bakrie’s negative net woring capital reached Rp9.01 trillion ($667 million).
“Negative working capital is expected to ease to Rp2.8 trillion after the bond was issued last week. In case the three creditors – Mitsubishi, Glencore, and Eurofa – accepts the bonds, then working capital may turn positive,” said Indra.