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Astra Agro launches rights issue to cut dollar debts
Astra Agro Lestari Tbk is offering 450 million new shares through a rights issue, aiming to raise around Rp 4 trillion (US$300 million) to pay off half of its debt.
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A worker moves palm oil kernels to a boat that will take them to a refinery in Sarawak, Malaysia. Astra Agro Lestari has sealed its shareholders' approval to conduct a rights offering aiming to reap Rp 4 trillion. (thejakartapost.com/Anton Hermansyah)
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stra Agro Lestari Tbk is offering 450 million new shares through a rights issue, aiming to raise around Rp 4 trillion (US$300 million) to pay off half of its debt.
Astra Agro Lestari finance director Rudy Chen said the corporate action had been approved by shareholders in an extraordinary general meeting (EGM) on Monday. The offering price will be decided in May, subject to market price.
"All the proceeds will be used to pay off foreign loans to improve our financial ratio. As per December 31, 2015, we had Rp 7.7 trillion in outstanding debt," Rudy said in Jakarta on Monday, adding that parent company Astra International Tbk would act as the standby buyer.
Rudy also explained that since the remaining debts were to be cut by half from $564 million to $274 million, the firm's debt to equity ratio (DER) would fall from 0.64 to 0.3.
Currently, most of Astra Agro's debts are in US dollars, eroding the company's net profit by 73.5 percent to Rp 580.36 billion because of a rise in foreign exchange losses in 2015.
"As of 2015, of debts of $564 million, around $507 million is in US dollars. Around 90 percent of our debt is in US dollars," he said. (ags)
