Indonesian lender BRI Agroniaga is planning to raise Rp 1 trillion ($75 million) via a rights issue to strengthen capital structure. In another planned fundraising, palm oil producer Tunas Baru Lampung is slated to launch its $200 million global bond to pay debts.
In the rights issue, BRI Agroniaga will offer 7.69 billion new shares at Rp 130 apiece. According to plan, the fresh capital will be used to “strengthen capital structure”, which in turn will boost credit expansion.
The shares, equivalent to 50.19 per cent of the enlarged capital, will be offered in June if shareholders approval can be obtained in April. State-owned Bank Rakyat Indonesia (BRI), the owner of 87 per cent of BRI Agro, has committed that it will inject money according to its proportion, the company said.
The rights issue is part of the bank’s strategy to enter the BUKU II category, the local groupings that classify banks in proportion to their core capitals. BUKU I is the lowest category and lists banks with core capital below Rp 1 trillion (US$73.88 million), followed by BUKU II with core capital between Rp 1 trillion and Rp 5 trillion. BUKU III category includes banks with core capital between Rp 5 trillion and Rp 30 trillion and BUKU IV ‘the highest’ catalogs banks whose core capital exceeds Rp 30 trillion.
Each category determines the activities that the banks can engage in. The higher the category, the wider the business scope.
BRI Agro is one of 10 Indonesian banks that are in the process of raising funds through rights offering. In total, the banks are planning to pool Rp 13.7 trillion from the market.
Two largest offerings will be carried out by Bank Permata and Bank Bukopin, each looking for Rp 3 trillion. This is followed by Bank QNB Indonesia (Rp 2 trillion), Bank Maybank Indonesia (Rp 2 trillion), and BRI Agroniaga (Rp 1 trillion).
Tunas Baru Lampung fundraising
Tunas Baru Lampung, who is part of Sungai Budi Group, is set to launch a $200 million global bond through its Singapore-based unit, TBLA International Pte Ltd. The unit then will channel the money in the form of a loan (intercompany loan), which entails a corporate guarantee to future bondholders.
The bonds will then be listed on the Singapore Stock Exchange (SGX).
The company plans to use the money to repay short to medium term loans, it has stated in a prospectus. In a quarterly report, Tunas Baru Lampung reported a total of Rp 3.84 trillion in loans, both long term and short term. It consists of dollar-denominated loans of $48.17 million, which mature between 2017 and 2022.
“The bonds are also expected to improve liquidity, considering that bonds don’t have amortisation while having a fixed interest. Bonds proceeds will also be used to fund the company’s general working capital, which in turn will increase profit,” said a Tunas Baru Lampung director.
To begin the process of launching, Tunas Baru Lampung will hold a shareholder meeting to obtain approval in April 10.