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BWPT says low price for rights issue is normal practice
Palm oil producer BW Plantation (BWPT) says the price of its shares â set low for a rights issue â is normal and is intended to attract investors to take part in the companyâs offering
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alm oil producer BW Plantation (BWPT) says the price of its shares ' set low for a rights issue ' is normal and is intended to attract investors to take part in the company's offering.
The plantation firm's director and corporate secretary, Kelik Irwantono, said in a written statement published on the Indonesia Stock Exchange (IDX) website that his company had set a lower price for its rights issue to lure investors.
'One of the most important factors to determine the price in a rights issue is to define the kind of incentive to be given to investors so they are eager to take part. According to market standards, the incentive is in the form of a discounted price, representing an average price of shares before and after the action,' he explained.
'Taking into account our previous corporate action in 2007, which generated up to US$50 million, the discount rate should be around 20 percent.'
Kelik's statement was made in response to the IDX's inquiries demanding that the company explain why it had set the price of its share for the rights issue price below market standard.
In a prospectus submitted to the IDX last week, BWPT said it planned to issue 27.02 billion new shares, priced between Rp 390 and Rp 411 apiece.
Before the company revealed its rights issue plan, shares of BWPT were priced at more than Rp 950 a piece.
The IDX suspended BWPT share trading on Sept. 17, when news of the planned rights issue surfaced, and resumed trading on Sept. 25.
After the suspension was lifted, the shares dropped 24.6 percent to Rp 720 apiece.
The bourse halted BWPT share trading once again on Monday, in an attempt to cool down trading after the company's prices slumped by nearly 52 percent from Rp 955 a piece on Sept. 23 to Rp 460 per share following the company's pricing explanation.
'Its only normal that the price plummeted so hard and suffered from a net sell. Investors were trying to adjust the price with the set rights issue rate,' Asjaya Indosurya analyst William Surya Wijaya said.
BWPT is looking to raise between Rp 10.54 trillion and Rp 11.1 trillion from the rights issue to fund a 100 percent acquisition of Singapore-listed plantation firm Green Eagle Holdings Pte. Ltd.
Green Eagle is an affiliate of Rajawali Capital, which is part of the Rajawali Corpora conglomerate controlled by Indonesian businessman Peter Sondakh. Rajawali Corpora manages several business sectors, including transportation, mining and plantations.
The conglomerate already has indirect ownership, equal to 21.4 percent, in BWPT through Matacuna Group, Pegasus SP One and
LGT BK (Singapore) Ltd./CLT TST AC Singapore, after the group acquired the two investment firms last month.
Rajawali's entry into BWPT had been rumored since earlier this year but had been frequently denied by the listed plantation firm.
The acquisition of Green Eagle is expected to boost the total size of BWPT's plantations to 419,006 hectares (ha) from the current size of 94,513 ha.
At the moment, BWPT's plantations are located in the provinces of Central, East and West Kalimantan. Those of Green Eagle are scattered in the provinces of East, South and West Kalimantan as well as Papua.
' JP/Anggi M. Lubis
