Axiata unit proposes rights issue to raise US$300mil

From the Star:

XL plans to raise US$300mil to reduce borrowings

PETALING JAYA: PT Excelcomindo Pratama Tbk (XL) of Indonesia, which is a unit of Axiata Group Bhd (formerly known as TM International Bhd), has proposed a rights issue to raise some US$300mil to reduce borrowings and improve its capital structure.

In a filing with Bursa Malaysia yesterday, Axiata said the rights issue would consist of equity and mandatory convertible notes (MCNs).

The size of equity and the MCNs, final issue price of the common shares as well as the conversion price of MCN will be determined later.

XL’s major shareholders, including Axiata and Emirates Telecommunications Corp International Indonesia Ltd, have committed to fully subscribe to their rights entitlement.

“This financing process demonstrates Axiata’s full support and backing to XL, and will provide XL the financial ability to continue investing in its business and strengthening its market position,” said Axiata president and chief executive officer Datuk Seri Jamaludin Ibrahim in a statement.

XL president director Hasnul Suhaimi added that the cellular operator’s operating performance was strong last year as both revenue and earnings before income tax, depreciation and amortisation grew by almost 50%.

With the proceeds to par down debts, XL will be able to reduce financing costs and improve its balance sheet to allow further investing for growth.

It was reported earlier that the Indonesian mobile operator required about RM2.1bil this year for its capital expenditure and that a rights issue was in the pipeline.

Jamaludin said Axiata was committed to increasing the free float of XL when market conditions improved. Axiata via Indocel Holding Sdn Bhd currently owns 83.8% of XL while Emirates holds 16% and the public 0.2%.

The proposed rights issue is subject to shareholders’ approval at an EGM to be held sometime this year and is expected to be completed by the fourth quarter.

It's simple, with this market being so buoyant, companies have been taking advantage of shareholders' good graces and raising money. We are obviously still in a defensive posture given the amount companies these days are asking from shareholders. I don't want to even mention the more ludicrous rights issue of 20% from Air Asia.