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ndustrial conglomerate Rajawali Corpora, owned by business tycoon Peter Sondakh, will control a majority stake in publicly listed BW Plantation (BWPT) following a Rp 10.8 trillion rights shares offering.

Rajawali would then merge its plantation unit Green Eagle Holdings Pte. Ltd. with BWPT as Rajawali would consequently own between a 51 percent and 83.35 percent stake in BWPT, depending on the absorption of the shares in the rights issue, BWPT corporate secretary Kelik Irwantoro said. Rajawali at present already has a 21.4 percent indirect stake in BWPT.

Following the scheme, BW Plantation and Green Eagle would further be known as Eagle High Plantation, the companies announced in a press conference after a general shareholders meeting that approved the corporate action on Thursday.

According to a prospectus released last week, BWPT said it planned to issue 27.02 billion new shares or equal to 85.71 percent of its enlarged capital, priced at Rp 400, in the rights issue '€” meaning the company would source up to Rp 10.85 trillion (US$887.74 million) in funds from the offering.

Each shareholder with one share will have the preemptive right for six new shares offered during the issue.

Among standby buyers are Rajawali Capital International, BNI Securities, Danareksa Sekuritas, Mandiri Sekuritas and Valbury Asia Securities.

'€œWe hope to finalize the transaction before year-end,'€ Kelik said. '€œOnce the plan is realized, we will change our name.'€

Proceeds from the rights issue, Kelik said, would mostly be used to acquire a 100 percent stake in Green Eagle, which will cost BW Plantation Rp 10.53 trillion.

Green Eagle is an affiliate of Rajawali Capital, part of the Rajawali Corpora conglomerate, which has assets in transportation, mining and plantation businesses.

'€œThe acquisition will provide lots of benefits as it will enlarge our company through Green Eagle'€™s enormous landbank and it will also help us boost our productivity,'€ Kelik explained.

Green Eagle currently has 419,000 plantation areas across the nation, with 142,000 planted areas. Meanwhile, BWPT has 94,000 hectares of plantation area, mostly in Kalimantan, with 70,000 planted areas.

BWPT'€™s production as of September comprised 487,774 tons of fresh fruit bunch (FFB) and 111,827 tons of crude palm oil (CPO). On the other hand, Green Eagle produced 524,534 tons of FFB and 127,165 of CPO during the period.

'€œWe plan to produce 350,000 tons of CPO next year, in comparison to our joined production of CPO that might hit 300,000 tons this year,'€ Kelik explained.

The two companies had planned to build four new processing facilities next year, three in Kalimantan and one in Papua, with a total capacity of 165 tons of CPO per hour and a total investment estimated to hit Rp 500 billion, according to him.

The new facilities will bring additional output for BWPT'€™s capacity of 210 tons per hour from facilities and Green Eagle'€™s 175 tons per hour from three facilities.

Rajawali Corpora general manager for investment Adam Jaya Putra said that the move to merge Green Eagle with BWPT would also be beneficial for Green Eagle, as a new Agriculture Ministry regulation introduced earlier this year bars non-listed plantation companies from having more than 100,000 hectares of land or from expanding if they have more plantation area than stipulated.

BWPT shares were previously suspended by the bourse in September as pricing for rights issue was way below trading price by more than half of about Rp 950 before the rights issue plan emerged. The stocks traded at Rp 460 on Thursday.