TheJakartaPost

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

Adhi postpones rights issue on volatile market

State-run company Adhi Karya announced on Wednesday that it would postpone its new share issuance in a rights offering that was part of the government’s state capital injection, amid fears ongoing market volatility would cut potential gains

Anggi M. Lubis (The Jakarta Post)
Jakarta
Thu, August 27, 2015

Share This Article

Change Size

Adhi postpones rights issue on volatile market

S

tate-run company Adhi Karya announced on Wednesday that it would postpone its new share issuance in a rights offering that was part of the government'€™s state capital injection, amid fears ongoing market volatility would cut potential gains.

Ki Syahgolang Permata, the construction firm'€™s corporate secretary, said that his company had delayed the rights issue by around three weeks in hopes that the market would be more favorable for Adhi Karya to carry out its corporate action.

'€œWe have decided to postpone our shareholders meeting to Sept. 16 considering the current market fluctuations,'€ he told reporters. The company was previously scheduled to hold an extraordinary shareholders meeting on Thursday to secure approval for the issuance.

Adhi Karya previously planned to reap Rp 2.75 trillion (US$193.6 million) from an issuance of 1.82 billion new shares in early September, of which around Rp 1.35 trillion will come from existing public shareholders and Rp 1.4 trillion from the government through a capital injection.

The price for the rights shares issuance had been set at Rp 1,510 and Rp 2,400.

The company'€™s shares ended at Rp 1,735 on Wednesday, up by 3.17 percent on a daily basis after the announcement was made. However, the company'€™s stocks have been losing nearly half of its prices throughout the year.

Construction stocks, according to Indonesia Stock Exchange (IDX) statistics data, have lost around 17 percent of their value year-to-date (ytd) as the benchmark Jakarta Composite Index (JCI) has lost 20 percent, one of the worst-performing indices in the region.

Investors have fled emerging markets such as Indonesia for safer havens such as the US on the back of stalling domestic growth and China'€™s economic slowdown, whereas the US economy is improving.

The company previously lowered the rights issuance prices, from an initial price range set at around Rp 2,000 to Rp 2,700 in a bid '€œto accommodate the market amid such huge volatility in the stock market'€, president director Kiswodarmawan previously said.

Adhi plans to use the funds from the rights issue to partly finance the first development phase of its light rail transit (LRT), which will cost around Rp 12.5 trillion. The project is expected to cost between Rp 35 trillion and Rp 40 trillion, of which 20 percent will come from Adhi'€™s cash reserves and the remaining 80 percent from loans.

The first phase of the LRT project will connect East Bekasi in West Java with Dukuh Atas in Central Jakarta, and Cibubur (West Java) with Cawang (East Jakarta). The next phase of the development, meanwhile, is set to connect Dukuh Atas with Palmerah (Central Jakarta), Cibubur with Bogor (West Java), and Palmerah with Grogol (West Jakarta).

Kiswodarmawan said the LRT project would kick off soon after a presidential regulation on the acceleration for the development of rail-based transport was issued.

The government recently decided to divide the LRT project into two parts, assigning Jakarta-owned developer Jakarta Propertindo (Jakpro) to handle development in the Jakarta area and Adhi for the city'€™s surrounding areas such as Bogor, Depok and Bekasi, according to Coordinating Economic Minister Darmin Nasution.

{

Your Opinion Matters

Share your experiences, suggestions, and any issues you've encountered on The Jakarta Post. We're here to listen.

Enter at least 30 characters
0 / 30

Thank You

Thank you for sharing your thoughts. We appreciate your feedback.