Provident Agro to use rights issue funds for expansion
The Jakarta Post
Crude palm oil (CPO) plantation firm PT Provident Agro (PALM) said it was looking to acquire approximately five plantation companies from the proceeds of its rights issue, which is expected to fetch the company Rp 887.03 billion.
Through the rights issue, Provident Agro plans to release 2.1 billion shares, or equal to 30 percent of its enlarged capital after the rights issue.
The company will offer its shares at Rp 420, with a nominal value of Rp 100. Hence, the company could gain Rp 887.03 billion at most through the rights issue.
The company also announced that it would utilize Rp 130 billion of the proceeds to take over other plantations via PT Mutiara Agam, its subsidiary in which it has a direct stake of 99.99 percent.
The subsidiary, also in plantations, has operations located in West Sumatera.
However, Provident Agro director and spokesman Devin Antonio Ridwan said that the company had yet to decide on which plantations it was keen on.
'But being selective, we will be looking at approximately five plantations,' he said, declining to provide further details on the takeover plans.
He added that 'feasible' plantations for the company to acquire were ones that were sufficiently 'of scale' to boost Provident Agro's business.
'These plantations have to meet our criteria, such as price and location,' he said.
In the first quarter of 2013, its fresh fruit bunches yield hit 54,400 tons per hectare, or 29.3 percent more than the same period last year.
Meanwhile, its crude palm oil yield reached 18,438 tons per hectare, a 29 percent year-on-year increase.
Besides for taking over plantations, Provident Agro will use another Rp 180 billion of the proceeds from the rights issue to finance its working capital, encompassing its subsidiaries.
Working capital expenses include raw material provisions and the maintenance of productive crops.
The company aims to utilize the remainder of the proceeds to expedite payments related to the acquisitions of PT Nusaraya Permai and PT Alam Permai in May 2012.
However, Devin noted that Provident Agro had yet to be a standby buyer for its rights issue.
Yet, he pointed out that the rights issue could still move forward as the two main shareholders in the company, PT Provident Capital Indonesia (PCI) and PT Saratoga Sentra Business (SSB), were ready to absorb the shares released through the rights issue.
Provident Capital Indonesia and Saratoga Sentra Business hold equal stakes of 43.3 percent in Provident Agro.
In the first nine months of the year, the company booked revenues of Rp 476.5 billion, hence booking a 7.2 percent annual gain. However, the company booked a loss of Rp 141.9 billion, a stark contrast to the Rp 51.4 billion profit made in the same period last year.
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