PT Rimo International Lestari Tbk [RIMO], a listed department store operator, is seeking to raise up to Rp 8.1 trillion ($610.7 million) through a pre-emptive rights issue, the proceeds of which will be used to buy out a property developer PT Hokindo Mediatama, hinting a possible backdoor listing of the property company.
In an official statement on Monday, the Jakarta-based company — formerly known as Rimo Catur Lestari — said that it’s planning to issue 30.6 billion new shares with a nominal value of Rp 250 a piece.
Under the proposed rights issues, each shareholder will be entitled to 90 new shares, offered at price of Rp 265 each, which is about 40 percent above Rimo International’s current price of Rp 190 per share, the statement said. Shareholders who opt not to participate will see their ownership diluted up to 98.9 percent after the rights issue.
Singaporean investment firm Haven Capital will be acting as the stand-by buyer for the rights issue, should existing shareholders decide not to exercise their rights, the company’s statement said. Funds from the new issued shares will be used almost entirely to acquire a 99.98 percent stake of Jakarta-based PT Hokindo Mediatama, and small portion will be used inject additional capital into the company.
Hokindo Mediatama, whose 99.99 percent is currently controlled by Fajarindah Megah Perkasa, engages in property development— such as malls and apartments to residential blocks — within integrated townships across Indonesia, including in Jakarta, Banten and Kalimantan. Following the acquisition, Rimo’s total asset will jump to Rp8.81 trillion from the current assets of only Rp17.69 billion. Rimo said after acquiring Hokindo, its core business will change to property business.
Analysts are speculating that the planned acquisition is a way for Hokindo Mediatama to list on the local bourse without going through an initial public offering, given the quantity of the transaction and the different line of business that both companies operate.
“Also, [Rimo] is planning the rights issuance and acquisition at a time when its financial performance and expansion plans are declining,” said Reza Nugraha, an analyst at MNC Securities, adding that he believed the transaction would be beneficial for both companies.
Rimo posted a net loss of Rp 868 million in the first quarter, compared to Rp 1.1 billion in the same period last year, while revenue declined by 25 percent to Rp 19.67 billion from Rp 26.28 billion in the same period last year. In 2014, Rimo posted net losses of Rp4.86 billion, compared to net losses of Rp5.68 billion in 2013, while revenues reached Rp122.85 billion, down from Rp291.18 billion in previous year.