By Anggi M. Lubis, The Jakarta Post, Jakarta

Provident Agro, one of Indonesia’s publicly listed plantation companies, expects to raise about Rp 33.41 billion (US$2.87 million) from the company’s rights shares offering next month.

According to the company’s statement published on the Indonesia Stock Exchange (IDX) website, Provident will issue 79.56 billion of new shares during the preemptive rights issuance on June 30, with a sale price of Rp 420 per share.

The proceeds, which are expected to reach Rp 33.41 billion, would be used to partly pay off its debt to Singapore-based Deira Cayman Ltd. The rights share issuance is pending approval from an extraordinary general shareholders’ meeting, which is scheduled to be held on June 11.

The amount of funds raised from the rights issuance will be used to pay off the company’s debt to Deira Cayman, which amounts to US$1.2 million. The loan was granted to Provident Agro’s subsidiaries PT Mutiara Sawit Seluma (MSS), PT Surya Agro Persada (SAP) and PT Saban Sawit Subur (SSS) in March 2012 by investment firm Deira Equity Ltd, before being diverted to Deira Cayman.

“The new shares will be acquired by Deira Cayman, which is a non-affiliated party to the company [Provident Agro],” read the statement.

With Deira Cayman acquiring 1.12 percent of the company’s total shares at the rights share issuance, old shareholders PT Saratoga Sentra Business and PT Provident Capita Indonesia — which hold equal shares in the company — will have their shares in Provident Agro diluted from 44.66 to 44.16 percent each.

The rights share issuance will also reduce public ownership in the company to 10.56 percent from the previous 10.68 percent.

“By conducting the rights issuance, the company’s total shares will increase and are expected to boost the liquidity of the company’s shares trading. Furthermore, MSS, SAP, and SSS will have their debts reduced, which will increase their performances and enable them to get new financing,” the statement went on.

The company’s total assets reached a total of Rp 3.96 trillion as of March, while its total liability accounted at Rp 2.34 trillion and its equity standing at Rp 1.62 trillion.

The plantation firm’s revenues went up by 60 percent year-on-year in the first quarter of this year. It managed to book Rp 85.22 billion in net profits during the first three months of the year, a significant increase compared to Rp 26.4 billion in net losses it booked during the same period last year.

The company recorded total net losses of Rp 417.13 billion in 2013, compared to Rp 86.82 billion losses in 2012.

Despite recording an 18.58 percent year-on-year increase in revenue to Rp 710.57 billion last year, the company fell short in generating profits as it was hauled back by volatility in global commodity prices and rupiah depreciation against the dollar.

The company’s fresh fruit brunch production increased by 19.91 percent year-on-year to 259,559 tons last year, while its crude palm oil sales went up by 21.43 percent to 83,631 tons.

Provident Agro also held a rights share issuance late last year, raising Rp 887.03 billion to acquire approximately five plantation companies.

Through the rights issue, Provident Agro released 2.1 billion shares, or equal to 30 percent of its enlarged capital after the rights issue.

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http://www.thejakartapost.com/news/2014/06/02/provident-eyes-rp-3341-billion-rights-issue.html